United States v. Rick Brown

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 15-3117 & 15-3261

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

RICK E. BROWN & MARY C. TALAGA,

Defendants-Appellants.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

Nos. 1:13-cr-00854-1, 1:13-cr-00854-3 — Gary Feinerman, Judge.

____________________

ARGUED MAY 23, 2017 — DECIDED JANUARY 19, 2018

____________________

Before BAUER, EASTERBROOK, and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge. A grand jury indicted Rick E. Brown

and Mary C. Talaga with one count of conspiracy to commit

health-care fraud, in violation of 18 U.S.C. § 1349, six counts

of health-care fraud, in violation of 18 U.S.C. § 1347, and three

counts of falsifying a matter or providing false statements, in

violation of 18 U.S.C. § 1035(a). A jury convicted them on all

counts. The district court sentenced Mr. Brown to

eighty-seven months’ imprisonment on the health-care fraud

2 Nos. 15-3117 & 15-3261

counts and terms of sixty months’ imprisonment on each of

the falsification counts to run concurrently with each other

and with the fraud counts. In doing so, the district court ex-

plained that a significant sentence was warranted for several

reasons, including general deterrence. Ms. Talaga was sen-

tenced to concurrent forty-five-month sentences on all of the

ten counts.

Both defendants now maintain that the district court erred

in imposing their respective sentences. Mr. Brown maintains

that the district court’s assumptions about the need for gen-

eral deterrence were unfounded and constituted procedural

error. Ms. Talaga argues that, when the district court calcu-

lated the amount of loss for which she was responsible, it im-

permissibly included losses that occurred before she joined

the conspiracy. The inclusion of these amounts resulted in a

higher loss amount, corresponding to a higher offense level

and sentence.

Because the district court did not err in its reasoning or in

its sentencing determination, we affirm its judgments.

I

BACKGROUND

A.

Medicall Physicians Group, Ltd. (“Medicall”), a company

that provided home physician visits to patients, employed

both Mr. Brown and Ms. Talaga. Mr. Brown served as Medi-

call’s office manager, and Ms. Talaga had responsibility for

medical billing. Dr. Roger Lucero, a third defendant, was the

owner and medical director of the company. He pleaded

Nos. 15-3117 & 15-3261 3

guilty to the conspiracy count, cooperated with the Govern-

ment, and testified against both Mr. Brown and Ms. Talaga.

Beginning at least as early as January 2007, Mr. Brown and

Dr. Lucero began submitting false and fraudulent claims to

Medicare. Ms. Talaga, who had been trained as a medical

biller, joined Medicall in August 2007. She reported to

Mr. Brown and was paid a percentage of Medicall’s earnings.

According to the evidence, the fraud at Medicall took at

least three forms. First, Mr. Brown and Ms. Talaga billed

Medicare for “prolonged” visits, using the prolonged care

code, as a way to pay for employees’ travel time. Second, re-

gardless whether the patient qualified for, or received, the

billed-for care, every patient was billed for “Care Plan Over-

sight,” a type of physician supervision for patients requiring

complex or multi-disciplinary care. Finally, Mr. Brown and

Ms. Talaga billed Medicare for services purportedly provided

to deceased patients, as well as services by providers who no

longer were associated with Medicall.

After hearing the evidence, the jury convicted both de-

fendants on all counts of the indictment.

1. Mr. Brown

The probation office prepared a presentence report

(“PSR”) for Mr. Brown. The PSR calculated a base offense

level of six under U.S.S.G. § 2B1.1(a)(2), and then applied an

eighteen-level increase under § 2B1.1(b)(1)(J) for an intended

loss of approximately $4.3 million. The PSR also applied (1) a

two-level increase for a federal health-care offense involving

a loss of more than $1 million but less than $7 million; (2) a

two-level increase for use of sophisticated means; (3) a

4 Nos. 15-3117 & 15-3261

four-level increase for being a leader or organizer; and (4) a

two-level increase for obstruction of justice because

Mr. Brown had testified falsely at trial about his role in the

offense. These increases yielded a total offense level of

thirty-four that, when combined with Mr. Brown’s criminal

history category of I, yielded a sentencing range of 151 to 188

months.

Mr. Brown objected to various aspects of the PSR’s calcu-

lation. The district court agreed with Mr. Brown that the fraud

did not involve sophisticated means. It also gave Mr. Brown

the benefit of the loss table in the new Guidelines, which

yielded a sixteen-level increase, as opposed to an eighteen-

level increase, for amount of loss. When combined with

Mr. Brown’s criminal history category, the new calculation

yielded a guidelines range of 121 to 151 months.

The district court then considered “the 3553(a) factors one

1

by one.” It also observed that “[s]ubsection (a)(2) requires the

Court to consider the need for the sentence imposed to accom-

plish the various purposes of criminal punishment. The first

purpose is to reflect the seriousness of the offense, to promote

respect for the law, and to provide just punishment for the

2

offense.” The court considered the crimes to be “serious” be-

cause they occurred “over an extended period of time” and

3

involved “$4.3 million in false claims.” The second purpose

1 R.386 (1:13-cr-00854-1) at 95.

2 Id. at 100.

3 Id. at 95.

Nos. 15-3117 & 15-3261 5

articulated in 18 U.S.C. § 3553(a) “is to afford adequate deter-

4

rence to criminal conduct.” The court considered this pur-

pose “a significant factor” because Medicare fraud unfortu-

nately is widespread “in this country; and those who are in

the medical field and who are tempted to engage in fraud

must know, they have to know, that the penalties are severe,

5

particularly given the low likelihood of getting caught.” The

court stated that it agreed with the Government

that people in the healthcare business and in the

home healthcare business in particular will

know about this sentence, and this sentence has

to send a signal. It’s not the only consideration,

and it’s not the most important consideration,

but it is a consideration that 3553(a)(2)(B) directs

me to consider, and I do have to consider that.[6]

Finally, the court noted that, with respect to specific deter-

rence, it was “highly unlikely” that Mr. Brown would commit

7

a crime in the future. The court then sentenced Mr. Brown to

eighty-seven months’ imprisonment.

The court reiterated many of these considerations in its

oral statement of reasons:

I don’t think that anything less than 87

months would be sufficient to fulfill the pur-

poses of 3553(a), and here’s why: The duration

4 Id. at 100.

5 Id.

6 Id. at 101.

7 Id.

6 Nos. 15-3117 & 15-3261

of the scheme. It went on for several years. This

wasn’t a momentary slip … . This was a sus-

tained course of knowing criminal conduct.

The amount actually stolen, over $1.3 mil-

lion. That’s a lot of money.

I’m going to come back to general deter-

rence. This is a white collar crime, so the sen-

tence imposed here is far more likely to have a

deterrent effect on Mr. Brown’s cohorts, those

also involved in the medical profession, than a

sentence in a drug case or an illegal re-entry

case.

I do agree … that people in the healthcare

field, people who are business—men and

women who are business people, they engage in

a cost/benefit analysis. And the benefit is the

benefit if you don’t get caught, and the cost is

the probability of getting caught multiplied by

the sanction.

And there’s a low probability of getting

caught, so the sanction has to be serious. It has

to be real, if there’s any hope of ensuring that at

least when people look at the cost and the bene-

fits, when they’re contemplating fraud, that

they realize that cost will outweigh the benefits.

Nos. 15-3117 & 15-3261 7

And finally, there’s Mr. Brown’s failure to

accept responsibility, and in particular his repe-

tition of the claim … that he wasn’t responsible

for the fraud.[8]

2. Ms. Talaga

The probation office also prepared a PSR for Ms. Talaga. It

set her base offense level at six pursuant to § 2B1.1, and ap-

plied an eighteen-level increase for the amount of loss (greater

than $2.5 million, but less than $7 million). It also included a

two-level increase for use of sophisticated means and a

two-level increase for a federal health-care offense. These de-

terminations yielded an offense level of twenty-eight that,

when combined with a criminal history category of I, yielded

a guidelines range of seventy-eight to ninety-seven months.

Ms. Talaga objected to various aspects of the PSR. Her pri-

mary argument was that the intended loss amount should be

reduced. She submitted that her “intended loss could not

have been more than the amount that Medicare actually paid

because Ms. Talaga knew that Medicall … would not have ob-

9

tained the full $4M+ that Medicall … fraudulently billed.”

Specifically, she noted that an application note to the fraud

guideline states “that the aggregate dollar amount of fraudu-

lent bills ‘is evidence sufficient to establish the amount of [the]

8 Id. at 105–06.

9 R.242 (1:13-cr-00854-3) at 1.

8 Nos. 15-3117 & 15-3261

10

intended loss, if not rebutted’ by the defendant.” She claimed

that

[u]nlike co-defendants Rick Brown and

Dr. Roger Lucero, [she] “was intimately familiar

with the billing procedures of the medical prac-

tice” as well as with 42 U.S.C. § 1395w-4(a)(1),

which provides that Medicare can never pay

any more than “the amount determined under

the Medicare fee schedule.” The Government’s

own investigation establishes that Ms. Talaga

successfully completed “Medical Billing,” a

course at Triton Junior College, and the “Medi-

cal Billing” course syllabus explains than the

course is “all about Medicare and medical bill-

ing problems,” but that the course covers

mostly Medicare issues. Further, Triton College

staff and a Triton Medical Billing course profes-

sor confirmed that the course “cover[s] in

depth” the Medicare regulation that Medicare

can never pay any more than the Medicare fee

schedule. Even aside from Ms. Talaga’s school-

ing, Ms. Talaga would have had to have under-

stood Medicare’s payment practices because

her income was based entirely on Medicare pay-

ment amounts with respect to her submitted

bills to Medicare.[11]

10 Id. (quoting U.S.S.G. § 2B1.1 cmt. n.3(F)(viii)).

11 Id. at 3–4 (footnotes omitted).

Nos. 15-3117 & 15-3261 9

Consequently, she claimed, she had rebutted the Govern-

ment’s prima facie case.

Ms. Talaga also argued that the amount of loss should be

decreased because she did not recognize that she was com-

12

mitting fraud when she first began at Medicall. Ms. Talaga

pointed to the testimony of another biller, Arian Shogren,

who testified that Mr. Brown told her that all patients actually

were receiving Care Plan Oversight. At first, Shogren stated

that she believed Mr. Brown; however, “she recognized the

13

fraud ‘at the end’ of her time working at Medicall.” Ms. Tal-

aga submitted that she, similarly, did not recognize the fraud

at the outset.

The court accepted that, as an experienced biller, she

would be familiar with Medicare’s reimbursement levels.

Therefore, concluded the court, Ms. Talaga should not be re-

sponsible for the amount of all the false claims, but only those

that fell within the reimbursement schedule set by Medicare.

Thus Ms. Talaga’s amount of loss was reduced to $3.262 mil-

14

lion. The court also reduced Ms. Talaga’s loss amount by

$222,000 for the few months during the conspiracy that she

did not work for Medicall. These reductions, however, did not

result in a reduction in offense level.

The court rejected Ms. Talaga’s argument that she should

not be responsible for fraudulent billings from the beginning

12 See id. at 6.

13 Id. (footnote omitted).

14 See R.387 (1:13-cr-00854-3) at 34–35.

10 Nos. 15-3117 & 15-3261

15

of her tenure. The court found by the preponderance of the

evidence that a seasoned and trained medical biller would

have realized, from the outset, that not every single patient

was receiving Care Plan Oversight, that the number of hours

being billed for Care Plan Oversight could not be reconciled

with the number of actual services that Dr. Lucero was per-

forming, and that she did not have the required documenta-

16

tion for the bills that she was submitting.

Giving Ms. Talaga the benefit of the upcoming amended

schedule, the court calculated a new guidelines range of

fifty-one to sixty-three months. After considering the

§ 3553(a) factors, the court imposed a sentence of forty-five

months’ imprisonment.

Both Mr. Brown and Ms. Talaga timely appealed their sen-

tences.

II

DISCUSSION

Both Mr. Brown and Ms. Talaga maintain that the district

court committed procedural error when imposing their sen-

tences. “Whether a district court followed proper sentencing

procedure is a question of law that we review de novo.”

United States v. Olmeda-Garcia, 613 F.3d 721, 723 (7th Cir. 2010).

To ensure that the sentencing judge did not

commit any “significant procedural error,” we

15 See id. at 29.

16 See id.

Nos. 15-3117 & 15-3261 11

examine whether the district court: i) properly

calculated the Guidelines range; ii) recognized

that the Guidelines range was not mandatory;

iii) considered the sentencing factors in

18 U.S.C. § 3553(a); iv) selected a sentence based

on facts that were not clearly erroneous; and v)

adequately explained the chosen sentence in-

cluding an explanation for any deviation from

the Guidelines range.

United States v. Lockwood, 840 F.3d 896, 900 (7th Cir. 2016)

(quoting Gall v. United States, 552 U.S. 38, 53 (2007)). We con-

sider first Mr. Brown’s claim of error and then turn to Ms. Tal-

aga’s.

A.

With respect to Mr. Brown, the district court properly cal-

culated the guidelines range, recognized its ability to depart

from the Guidelines, considered all of the § 3553(a) factors,

and imposed a sentence that was thirty-four months below the

guidelines range—a sentence that the court characterized as

17

“a significant downward variance.” The court noted that

four factors prevented it from departing further: the duration

of the scheme, the amount of the fraud, the need for general

18

deterrence, and Mr. Brown’s failure to accept responsibility.

17 R.386 (1:13-cr-00854-1) at 103.

18 See id. at 105–06.

12 Nos. 15-3117 & 15-3261

All of these factors are legitimate considerations for the court

to take into account. See 18 U.S.C. § 3553(a).

Mr. Brown maintains, however, that the district court

committed procedural error because it relied on “unfounded”

19

assumptions in articulating a need for general deterrence.

Specifically, Mr. Brown questions the district court’s belief

that would-be white-collar criminals engage in cost-benefit

analyses in deciding whether to engage in illicit activities. He

further questions the court’s application of this principle to

the health-care context, specifically that, given the “low prob-

20

ability of getting caught,” a serious penalty was necessary to

21

deter others from engaging in this kind of crime.

We previously have endorsed the idea that white-collar

criminals “act rationally, calculating and comparing the risks

and the rewards before deciding whether to engage in crimi-

nal activity.” United States v. Warner, 792 F.3d 847, 860–61 (7th

Cir. 2015). They are, therefore, “prime candidates for general

deterrence.” Id. at 860 (quoting United States v. Peppel, 707 F.3d

627, 637 (6th Cir. 2013)). Our approach comports with that of

our sister circuits. See United States v. Musgrave, 761 F.3d 602,

19 Appellant Brown’s Br. 35.

20 R.386 (1:13-cr-00854-1) at 100 (observing that Medicare fraud unfortu-

nately is widespread “in this country” and that “those who are in the med-

ical field and who are tempted to engage in fraud must know … that the

penalties are severe, particularly given the low likelihood of getting

caught”).

21Id. at 105 (“[M]en and women who are businesspeople, they engage in

a cost/benefit analysis. And the benefit is the benefit if you don’t get

caught, and the cost is the probability of getting caught multiplied by the

sanction.”).

Nos. 15-3117 & 15-3261 13

609 (6th Cir. 2014) (“Because economic and fraud-based

crimes are more rational, cool, and calculated than sudden

crimes of passion or opportunity, these crimes are prime can-

didates for general deterrence.” (quoting Peppel, 707 F.3d at

637)); United States v. Martin, 455 F.3d 1227, 1240 (11th Cir.

2006) (using language identical to that in Musgrave); cf. United

States v. Goffer, 721 F.3d 113, 132 (2d Cir. 2013) (noting that

“high sentences” were necessary to alter the calculus “that in-

sider trading ‘was a game worth playing’”). The district court,

therefore, did not err in relying on such a widely accepted

principle.

The district court was entitled to conclude that, given that

health-care fraud is widespread and that therefore there is a

lower likelihood of getting caught, a serious penalty was nec-

essary to ensure deterrence. At sentencing, the Government

specifically brought to the district court’s attention that “the

Medicare program has imposed a moratorium on additional

companies joining the program to provide home healthcare

22

services because it is–the fraud in the area is so prevalent.”

Mr. Brown did not dispute this assertion, either by way of ar-

23

gument or contrary evidence. Indeed, in his brief to this

22 Id. at 71.

23 Indeed, any such argument by Mr. Brown would have been unfounded

because the Centers for Medicare & Medicaid Services did extend its mor-

atorium on new home health agencies in Chicago, among other metropol-

itan areas, based on the “significant potential for fraud, waste, or abuse.”

Medicare, Medicaid, and Children’s Health Insurance Programs: An-

nouncement of the Extension of Temporary Moratoria on Enrollment of

Part B Non-Emergency Ground Ambulance Suppliers and Home Health

14 Nos. 15-3117 & 15-3261

court he acknowledges that “white collar crimes such as

health care fraud, public corruption, and the like, seem to con-

24

tinue unabated.”

Mr. Brown also submits, however, that “[s]ome press re-

leases and news articles leading up to Brown’s September

2015 sentencing hearing include rather dramatic statistics

about the success of intensified law enforcement efforts in the

25

area of Medicare fraud.” Given these increased efforts and

the publicity they received, Mr. Brown suggests that “it is dif-

ficult to understand how the district court could have so

heartily agreed with the proposition that white-collar offend-

26

ers in Brown’s field are less likely to get caught.” Mr. Brown

never invited the district court’s attention to these press re-

leases and articles. Therefore, we can hardly fault the court for

not considering them. “[S]entencing judges cannot be ex-

pected to rely on evidence not before them.” United States v.

Reibel, 688 F.3d 868, 872 (7th Cir. 2012).

Moreover, even if this material had been presented to the

district court, it would not have required the court to alter its

conclusion that those who engage in Medicare fraud have a

27

“low likelihood of getting caught.” In determining the im-

portance of deterrence in crafting a sentence, the sentencing

Agencies in Designated Geographic Locations, 82 Fed. Reg. 2363 (Jan. 9,

2017).

24 Appellant Brown’s Br. 41.

25 Id. at 37–38.

26 Id. at 39.

27 R.386 (1:13-cr-00854-1) at 100.

Nos. 15-3117 & 15-3261 15

court must answer the situation from the perspective of the

prospective offender. From that perspective, the likelihood of

getting caught depends not simply on the amount of re-

sources that the Government expends on a particular type of

crime, but the frequency with which the particular crime is

committed and the ease with which it can be committed and

go undetected. Indeed, Mr. Brown observed in his brief that

28

“health care fraud … seem[s] to continue unabated.” The

vast size and complexity of the Medicare program makes

29

fraud detection especially difficult. Indeed, the unique prob-

lems faced in detecting fraud in the home-health-care indus-

try prompted the Centers for Medicare & Medicaid Services

to extend its moratorium on new home-health-care agencies

in Chicago—a fact specifically brought to the district court’s

30

attention. In short, because of the magnitude of the Medicare

program, an increase in resources would not necessarily re-

sult in a potential offender determining that there is a mean-

ingful increase in the likelihood of detection. The district court

did not err, therefore, in resting its conclusion about the need

28 Appellant Brown’s Br. 41.

29 The Government Accountability Office continues to designate “Medi-

care as a high-risk program … due to its size, complexity, and susceptibil-

ity to mismanagement and improper payments.” Gov’t Accountability Of-

fice, High Risk Series 520 (2017), https://www.gao.gov/assets/690/

682765.pdf; see also United States v. Kuhlman, 711 F.3d 1321, 1328 (11th Cir.

2013) (observing that “deterrence is an important factor in the sentencing

calculus because health care fraud is so rampant that the government lacks

the resources to reach it all”).

30 See R.386 (1:13-cr-00854-1) at 71.

16 Nos. 15-3117 & 15-3261

for general deterrence on the basis that there was a low likeli-

hood of getting caught for Medicare fraud.

Mr. Brown maintains, however, that his case is indistin-

guishable from United States v. England, 555 F.3d 616 (7th Cir.

2009), and other cases in which we have found error because

the district court based the sentence on unfounded assump-

tions. In England, the defendant, while incarcerated, threat-

ened witnesses over the telephone and later was convicted of

threatening force against a witness, his brother-in-law. At sen-

tencing, the court articulated the belief that, had the defend-

ant been out on bond, he would have armed himself and used

“what degree of force … was necessary to get them to drop

the charges against him.” Id. at 620–21 (internal quotation

marks omitted). The district court, therefore, determined that

the appropriate guideline was § 2A2.1, “Assault with Intent

to Commit Murder; Attempted Murder,” and that the nature

of the offense warranted a sentence within the attempted-

murder guideline range. Id. at 618–19. On appeal, we evalu-

ated whether the district court’s findings “were sufficiently

‘based on reliable evidence’ to satisfy due process, or if they

amount[ed] to speculation, albeit informed, that f[ell] short of

satisfying due process requirements.” Id. at 622 (quoting

United States v. Santiago, 495 F.3d 820, 824 (7th Cir. 2007)). We

explained that

[t]he preponderance of the evidence standard

satisfies due process in a case, such as this one,

where the district court sentences a defendant

based on the guideline for a crime the court be-

lieves the defendant would have committed if

out of prison on bond. Simply put, the question

Nos. 15-3117 & 15-3261 17

here is whether a preponderance of the evi-

dence supports the court’s belief that the defend-

ant would have committed the crime. Adhering

to such a standard operates to preclude a sen-

tencing court from sentencing defendants for

crimes not sufficiently supported by reliable ev-

idence.

Id. In England, we were “unable to conclude that a preponder-

ance of the evidence buttresse[d] the court’s belief that Eng-

land would have” committed the crime of attempted murder

because all of the defendant’s family, including the threat-

ened witness, “testified that they did not feel threatened by

England’s statements” but “that England was merely ‘blow-

ing off steam’ in issuing threats.” Id. at 623. “[B]ecause the ev-

idence appear[ed] at least in equipoise,” the preponderance

of the evidence standard was not met. Id.

Mr. Brown’s situation stands in stark contrast to the de-

fendant in England. In England, the district court drew conclu-

sions about England’s individual conduct, which were not

supported by a preponderance of the evidence, to determine

England’s presumptive guideline range and then sentenced

England within that range. Here, however, the factual foun-

dations for the district court’s guideline calculation are sound.

Moreover, the district court’s statements regarding white-col-

lar crime and the prevalence of Medicare fraud are not un-

founded assumptions but are grounded in case law, in the rec-

31

ord, and in common sense.

31The other cases on which Mr. Brown relies are equally unhelpful. In

United States v. Halliday, 672 F.3d 462 (7th Cir. 2012), the district court, in

18 Nos. 15-3117 & 15-3261

Here, Mr. Brown faults the district court for not address-

ing and accepting his policy argument, based on penological

studies, that “it is the certainty of conviction rather than the

32

length of sentence that serves to deter.” In the district court,

the only mention of these studies was at the sentencing hear-

ing. Defense counsel stated:

reviewing § 3553(a) factors, stated that “Halliday believed [child pornog-

raphy] was ‘victimless’ and that he did not ‘believe any of this is crimi-

nal.’” Id. at 474. However, there was no evidence in the record for the

court’s conclusions; the “statements about Halliday’s belief that the crimes

at issue were ‘victimless’ were pure speculation.” Id. at 475. Here, the

court’s statement about the low likelihood of being caught for health-care

fraud is grounded in the fact that Medicare fraud, and specifically home-

health-care fraud, is prevalent, a fact that explicitly was raised during sen-

tencing.

Similarly in United States v. Bradley, 628 F.3d 394, 395 (7th Cir. 2010),

the district court imposed a sentence that was 169 months above the guide-

lines range. The district court believed a severe penalty was necessary be-

cause, according to the court, the defendant had a long, undiscovered his-

tory of engaging in sexual activity with minors. However, there was no

evidence in the record that the defendant had engaged in sexual activity

with any minor except for the victim. In reviewing the sentence, we ob-

served that the district court had made “a questionable … prediction

about future conduct based on rank speculation about other, multiple in-

stances of deviant behavior.” Id. at 401. Here, the court did not engage in

any speculation about the defendant’s past or future conduct, and specu-

lation was not used to justify an above-guidelines sentence. Cf. United

States v. Martin, 718 F.3d 684, 688 (7th Cir. 2013) (noting that, “although

we have held that a district court’s unfounded speculation that sex offend-

ers are not deterrable may necessitate remand, we have done so only

where the court imposed an above-guidelines sentence for purposes of

deterrence” (citation omitted)).

32 Brown’s Reply Br. 3.

Nos. 15-3117 & 15-3261 19

I’ll just note briefly that the statute only requires

adequate deterrence, not maximal deterrence

with the sentence the Court imposes. And I

would also add that studies have shown that it’s

really the certainty of punishment that drives

people more in terms of deterrence than the ac-

tual severity or even the swiftness of the impo-

sition of punishment.[33]

For these reasons, counsel urged, “even a modest prison term

for Mr. Brown could send that adequate message to society

that law enforcement can and will investigate you for Medi-

34

care fraud.” The district court did not have before it any spe-

cific studies. Indeed, Mr. Brown did not bring specific studies

35

to this court’s attention until his reply brief.

There is no question that, from a procedural perspective,

the district court addressed and rejected this argument. In its

statement of reasons, the court stated that it “agree[d] with

[Government counsel] that people in the healthcare field …

engage in a cost/benefit analysis. And the benefit is the benefit

if you don’t get caught, and the cost is the probability of get-

36

ting caught multiplied by the sanction.”

The district court was under no obligation to accept or to

comment further on Mr. Brown’s deterrence argument. In

United States v. Schmitz, 717 F.3d 536, 542 (7th Cir. 2013), the

33 R.386 (1:13-cr-00854-1) at 61.

34 Id.

35 See Brown’s Reply Br. 3–4.

36 R.386 (1:13-cr-00854-1) at 105.

20 Nos. 15-3117 & 15-3261

defendant pleaded guilty to mail fraud, and the resulting

guidelines sentence was 87 to 108 months. Before the district

court, the defendant argued that the recently increased “pen-

alties for fraud offenses represented a departure from the phi-

losophy animating the original version of the Guidelines,

namely that a short but definite period of incarceration would

suffice as a deterrent to most white collar offenders.” Id. at

539. The district court, without explicitly addressing this ar-

gument, sentenced Schmitz to a term of eighty-four months.

On appeal, we determined that Schmitz’s argument was

“not one addressed to his own characteristics and circum-

stances,” but “was a categorical challenge to the validity of

the fraud guideline, on the ground that the severity of sen-

tences called for by the current incarnation of that guideline

is unsupported by any empirical data demonstrating the

need” for longer sentences. Id. at 542. Because it was a “blan-

ket challenge to the guideline rather than one tailored to [the

defendant’s] unique characteristics and circumstances, it

[wa]s not one that the district judge [had to] explicitly ad-

dress.” Id. Moreover, the district court “was perfectly entitled

to accept the penal philosophy embodied in the current fraud

guideline and was not obligated to explain why [it] chose to

do so.” Id.; see also United States v. Hancock, 825 F.3d 340, 344

(7th Cir. 2016) (quoting Schmitz for the proposition that a dis-

trict court need not address Hancock’s policy argument that

“the Guidelines’ offense-level increases for receipt, transport,

possession, or distribution of child-pornography, fit poorly

with modern practical realities” and specifically reiterating

that “the district judge was ‘perfectly entitled to accept the

penal philosophy embodied in the current [child-pornogra-

phy] guideline’” (alteration in original)).

Nos. 15-3117 & 15-3261 21

Like the district courts in Schmitz and Hancock, here the

district court was “perfectly entitled to accept the penal phi-

losophy embodied” in the Guidelines that societal goals are

served by increasing fraud sentences to reflect the amount of

loss, as opposed to imposing only nominal sentences. We find

no substantive or procedural error in the district court’s im-

position of sentence on Mr. Brown.

B.

We turn now to Ms. Talaga’s sentence. She takes issue

with one of the factual bases on which the court’s calculation

of loss rests. Specifically, she claims that the district court’s

calculation of loss should not include amounts for claims da-

ting back to 2007 because the Government did not prove that

she was aware at that time that the claims were fraudulent.

We review the district court’s determination of loss for clear

error, see United States v. Diamond, 378 F.3d 720, 726 (7th Cir.

2004), and will reverse the district court “only if we are left

with the definite and firm conviction that a mistake was

made,” United States v. Bryant, 557 F.3d 489, 497 (7th Cir. 2009)

(internal quotation marks omitted).

The record supports the district court’s conclusion that, in

2007, Ms. Talaga would have known that her submissions

were fraudulent. Before the district court, Ms. Talaga argued

that she had training in Medicare billing and “was intimately

37

familiar with the billing procedures of the medical practice.”

37 R.242 (1:13-cr-00854-3) at 3 (internal quotation marks omitted).

22 Nos. 15-3117 & 15-3261

She also submitted documentation of her successful comple-

tion of a course at Triton Junior College on Medical Billing

38

that was “all about Medicare and medical billing problems.”

Consequently, she maintained that her intended loss should

be based on what Medicare actually paid, not what was billed,

because she “knew that Medicall … would not have obtained

39

the full $4M+ that [it] fraudulently billed.” The district court

accepted this argument to reduce Ms. Talaga’s amount of loss

to $3.262 million. This same evidence supports the district

court’s conclusion that Ms. Talaga would have recognized

from the outset that there was a problem with billing every

patient for Care Plan Oversight, that the numbers of hours for

Care Plan Oversight could not be reconciled with the number

of hours that the physicians spent performing other services,

and that there was a lack of documentation to support the

40

claims she was submitting.

Having convinced the district court of her expertise,

Ms. Talaga now tries to discount the training she received. As

we already have noted, however, in addition to her formal

education, Ms. Talaga was an experienced Medicare biller

when she arrived at Medicall. There was testimony that she

performed her work quickly, that she knew how to re-code

rejected claims so that they would be paid, and that she

41

trained other staff. The district court reasonably concluded

38 Id. at 3–4 (internal quotation marks omitted).

39 Id. at 1.

40 See R.387 (1:13-cr-00854-3) at 29.

41 See R.374 (1:13-cr-00854-3) at 100 (Trial Tr. 346).

Nos. 15-3117 & 15-3261 23

that, based on Ms. Talaga’s training and experience, she

would have recognized, based on the sheer volume of claims

for Care Plan Oversight (totaling up to three weeks per month

42

of Dr. Lucero’s time), that these claims were fraudulent.

Ms. Talaga also submits that other evidence in the record

undermines the court’s conclusion that she would have rec-

ognized the fraud. Ms. Talaga points to the testimony of an-

other Medicall biller, Arian Shogren, who stated that she ini-

tially believed that all patients actually were receiving Care

Plan Oversight. However, Shogren did not have experience

with Medicare billing before she began working at Medicall.

Indeed, when she began working at Medicall, she was a tech-

nician who did scheduling, took vitals, and kept track of pa-

43

tients’ medications. Later, she performed some billing after

44

receiving training from Ms. Talaga. Consequently, the fact

that she did not immediately recognize the fraud does not

suggest that Ms. Talaga, an experienced biller, also failed to

do so.

Second, Ms. Talaga observes that one Government wit-

ness, Kelly Hartung, gave conflicting definitions of Care Plan

Oversight. In her view, because the Government’s own wit-

ness could not articulate consistently a definition for Care

Plan Oversight, it “is unrealistic” to expect that she would

42 See R.265 (1:13-cr-00854-3) at 9 (citing Gov’t Trial Ex. 7-S).

43 See R.375 (1:13-cr-00854-3) at 6–7 (Trial Tr. 402–03).

44 Id. at 9–10 (Trial Tr. 405–06).

24 Nos. 15-3117 & 15-3261

have been able to recognize that the bills for Care Plan Over-

45

sight were fraudulent. However, the fact that Hartung had

difficulty articulating the definition of Care Plan Oversight

46

during cross-examination does not negate the fact that

Ms. Talaga, as a trained Medicare biller, knew when it was

appropriate to bill for Care Plan Oversight and knew that

Care Plan Oversight bills—in such a high volume that they

represented the bulk of Dr. Lucero’s time—were fraudulent.

Ms. Talaga has not established that the district court com-

mitted clear error in holding her responsible for fraudulent

claims from the beginning of her tenure with Medicall. We

therefore affirm her sentence.

Conclusion

For the foregoing reasons, we affirm the district court’s

judgments with respect to the sentences of Mr. Brown

and Ms. Talaga.

AFFIRMED

45 Appellant Talaga’s Br. 10–11.

46 See R.373 (1:13-cr-00854-3) at 40–49 (Trial Tr. 127–36).