Petition for Writ of Certiorari — Raithatha v. United States

Supreme Court

FILepS®

04,892 DEC 97 2004

PREG He.

JP fen 5

IN THE

Supreme Court of the Hnited States

P. G. RAITHATHA,

Petitioner,

V.

UNITED STATES,

Respondent.

On Petition for a Writ of Certiorari

to United States Court of Appeals for the Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI

JEFFREY L. FISHER

(Counsel of Record)

DAVIS WRIGHT TREMAINE LLP

2600 Century Square

1501 Fourth Avenue

Seattle, WA 98101-1688

(206) 622-3150

i

QUESTIONS PRESENTED

1. Whether Petitioner’s sentence under the Federal

Sentencing Guidelines violates the rule of Blakely v.

Washington, 124 S. Ct. 2531 (2004).

2. Whether the Court of Appeals contravened the Ex

Post Facto Clause in upholding Petitioner’s sentence based on

an amendment to the United States Sentencing Guidelines that

was enacted after Petitioner’s criminal conduct and that subjects

offenders to more severe punishment.

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TABLE OF CONTENTS

QUESTICING FIRESSIIINS tt svcnevvescccssiasietinecegreanesrenerenensvteneeviins .

PETITION FOR A WRIT OF CERTIORARI ...........ccceesseseeeees 1

OPINIONS BELOW: «....cccvnesoansericasutesenpeniernns iasdiemnenaiseeenans 1

STATEMENT OF FURISDIIC TION .<.sccecsttmessnscocestssnstquevstonete 1

CONSTITUTIONAL AND STATUTORY PROVISIONS

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STATEMENT GF ‘THEE CAR occserscsinsscatevinenssikecsveenneretenmeoies F

REASONS FOR GRANTING THE WRIT ...........:ccssssssssesesees 5

I. Petitioner’s Sentencing Did Not Comply

With Blakley v. Washingt i cicccccalcnniminmicencimnineen 5

II. The Sixth Circuit’s Use Of A New

Guideline Amendment To Uphold Petitioner’s

Sentence Violated The Ex Post Facto Clause. ..............s0e000 6

CONCLUSION nacconsinisianissinsvnpiantiineiuiewciaia testa aiatiaealaicaienaieds 9

APPENDIX A, Sixth Circuit’s Denial of Rehearing in

Light of Blakely v. WASHIMQION wicccexncsesnseserseseicenitiaaeneseivens App. 1

APPENDIX B, Sixth Circuit’s Amended Opinion ............ App. 3

APENDIX C, Sixth Circuit’s Initial Opinion................... App. 25

APPENDIX D, District Court’s Sentencing Order.......... App. 45

TABLE OF AUTHORITIES

Cases:

Blakely v. Washington, 124 S. Ct. 2531 (2004) ........ eee 1,4,5

Miller v. Florida, 482 U.S. 423 (1987) ........secccssscsssssrsoseseessvesers 7

United States v. Brennan, 326 F.3d 176 (3rd Cir. 2003)............. 7

United States v. Geevers, 226 F.3d 186 (3rd Cir. 2000) SE RANI 7

United States v. Koch, 383 F.3d 436 (6th Cir. 2004) .............. 4

United States v. McBride, 362 F.3d 360 (6th Cir. 2004)............. 7

United States v. Saucedo, 950 F.2d 1508 (10th Cir. 1991)......... 7

United States v. Smallwood, 35 F.3d 414 (9th Cir. 1994)........... 7

United States v. Watkins, 994 F.2d 1192 (6th Cir. 1993)............ 6

Docketed Cases: ;

United States v. Booker, NO. 04-104 00.0... .ccccccccsssssecccceecseeeeseeeee 5

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Statutes:

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les OF SIE E Grcsenssieanesiiilebuisonscrcessnieipuianinlcnennpeiiacanasaieiaiial

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United States Sentencing Guidelines Provisions:

DEE vicicsesdsicskcinesvnsirscnarsdobetsnbensecsipneninensavtnentorenpseentaneniiainen 4,6

§ 2B1.1, comment n.3(A) (2001) ........ceeeereeseereeteeeeeceeeeeeseneeenes 7

EE eee 2, 4, 6

PETITION FOR A WRIT OF CERTIORARI

Petitioner Dr. P.G. Raithatha respectfully petitions for a

writ of certiorari to the United States Court of Appeals for the

Sixth Circuit in United States v. Raithatha, No. 02-6278.

OPINIONS BELOW

The amended opinion of the Sixth Circuit is published at

385 F.3d 1013 (6th Cir. 2004) and is reprinted at App. 3-24 The

accompanying order denying the petition for rehearing is

unpublished and is reprinted at App. 1-2. The district court’s

sentencing orders are unpublished and are reprinted at App. 45-

48.

STATEMENT OF JURISDICTION

The Sixth Circuit issued its order denying rehearing on

September 29, 2004. This Court’s jurisdiction is invoked under

28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED

The Sixth Amendment to the United States Constitution

provides in relevant part: “In all criminal prosecutions, the

accused shall enjoy the right to a speedy and public trial, by an

impartial jury.”

The Fifth Amendment to the United States Constitution

provides in relevant part: “No person shall be . . . deprived of

life, liberty, or property, without due process of law.”

Article I, section 9 of the United States Constitution

provides in relevant part: “No bill of attainder or ex post facto

Law should be passed.”

Subsection 2F1.1(b)(1) (2001) of the (now superceded)

United States Sentencing Guidelines provided in relevant part:

2

“If the loss exceeded $5,000, increase the offense level as

follows: . .. [mJore than $200,000 — add 8.”

Application Note 3(A) to § 2F1 (2001) of the (now

superceded) United States Sentencing Guidelines provided in

relevant part: “Subject to the exclusions in subdivision (D), loss

is the greater of the actual loss or intended loss. . . . (ii) Intended

loss. — ‘Intended loss’ . . . (II) includes intended pecuniary harm

that would be been impossible or unlikely to occur.”

STATEMENT OF THE CASE

This criminal case presents two separate constitutional

errors pertaining to a sentencing under the Federal Sentencing

Guidelines.

1. Petitioner Dr. P.G. Raithatha is a physician who

owned and operated health clinics in rural Kentucky for over

twenty years. In 2001, he was convicted by a jury in the United

States District Court for the Eastern District of Kentucky for

scheming to defraud private health insurance companies and

Medicare/Medicaid, in violation of 18 U.S.C. § 1347, and of

making false statements to the Department of Labor and the

Immigration and Naturalization Services, in violation of 18

U.S.C. § 1001. The conduct at issue took place during 1997-99.

These were Petitioner’s first criminal convictions.

The “base offense level” for Petitioner’s crimes is 6.

App. 13; USSG § 2F1.1 (2001). This level, combined with his

Criminal History Category of I, yields a sentencing range of 0-6

months. See USSG Sentencing Table.

As is often the case under the Federal Sentencing

Guidelines, however, Petitioner’s actual sentence turned far

more on judicial factfinding (by a preponderance of the

evidence) than on the factual elements of the crimes of

conviction. Over Petitioner’s objection, the district court

increased Petitioner’s offense level by 2 points for “more than

3

minimal planning,” § 2F1.1(b)(2) (2001), and by 2 additional

points for the violation of a private trust, § 3B1.3. App. 13.

Also over Petitioner’s objection, the district court

increased Petitioner’s offense level by 8 more points based on

the court’s finding — or, more specifically, its “reasonable

estimate” — that Petitioner intended to cause a loss of

$256,854.94. App. 9; § 2F1.1(b)(1)() (2001). This

complicated calculation, adopted from the probation officer’s

presentence investigation report, broke down into two

components. First, the court found that Petitioner intended to

cause a loss of approximately $206,461.43 by “upcoding” bills

he submitted to Medicare/Medicaid — that is, by billing the

government for more expensive medical tasks than were

actually performed. Second, the court found that Petitioner

intended to cause a loss of $50,393.53 by including personal

expenses in a cost report his clinic submitted to

Medicare/Medicaid. App. 9.

These additional findings increased Petitioner’s offender

score from 6 to 18, and increased his sentencing range from 0-6

months to 27-33 months. After making a couple of other

findings and adjustments that are not relevant here, the district

court sentenced Petitioner on each count to 27 months in federal

prison, to be followed by two-years- of supervised release. App.

13. All of Petitioner’s sentences run concurrently, and will

commence if and when his appeals are rejected.

_ 2. In an opinion dated May 19, 2004, the Sixth Circuit

affirmed Petitioner’s convictions and sentence. It rejected

Petitioner’s argument that the district court overstated the loss

that resulted from the upcoding activity, concluding that

Petitioner “failed to demonstrate that the loss calculation as to

[that activity] was outside the universe of acceptable

computations.” App. 43 (quotation and citation omitted).

4

The Sixth Circuit also rejected Petitioner’s argument that

the $50,393.53 in personal expenses should not have been

included in the “intended loss” calculation. Petitioner’s clinic

already was receiving the maximum possible reimbursement, so

Petitioner asserted it would have been impossible for the

inclusion of personal expenses to trigger additional

reimbursement. App. 44. The Sixth Circuit, however, turned

away this argument on a ground never advanced by the

Government: that the impossibility of causing this loss was

irrelevant because an amendment to the Guidelines enacted in

2001 — well after the conduct at issue — states that “a finding of

intended loss is not limited to those losses possible to inflict, or

those gains possible for a Defendant to achieve.” App. 44

(citing USSG § 2B1.1, cmt. n.3(A)(i1)).!

3. Petitioner sought rehearing on two grounds relevant

here. First, he argued that his sentence was invalid in light of

Blakely v. Washington, 124 S. Ct. 2531 (2004), which was

decided shortly after the Sixth Circuit’s opinion, because the

district court increased his sentence from a maximum of 6

months to 27 months on the basis of judicial findings by a

preponderance of the evidence. Second, Petitioner argued that

the Sixth Circuit’s use of the 2001 Guideline amendment to

uphold the district court’s intended loss calculation violated the

Ex Post Facto Clause.

The Sixth Circuit denied rehearing on September 29,

2004. Applying on its decision in United States v. Koch, 383

F.3d 436 (6th Cir. 2004) (en banc), which held that Blakely did

not apply to the Federal Sentencing Guidelines, the Sixth

Circuit rejected Petitioner’s Blakely argument “in the interest of

judicial economy and pending a definitive ruling by the |

Supreme Court.” App. 1. Furthermore, the Sixth Circuit issued

1 On November 1, 2001, after the district court proceedings but before the

Sixth Circuit heard this case, § 2F1.1, and its accompanying commentary,

was deleted and consolidated with § 2B1.1.

5

an amended opinion noting for the first time that “[t]his Court’s

reference to the 2001 amendments to the Sentencing Guidelines

are inconsequential to this case because removing $50,393.53

from the loss calculation” — the amount Petitioner asserted was

impossible to inflict — “would not have affected Defendant’s

offense level.” App. 21n.4. The court, however, did not delete

its reference to the 2001 amendment. App. 20-21, 23.

REASONS FOR GRANTING THE WRIT

I. Petitioner’s Sentencing Did Not Comply With

Blakley v. Washington.

In Blakely v. Washington, 124 S. Ct. 2531 (2004), this

Court held that the Sixth Amendment prohibited a Washington

State court from using its own factual findings to increase a

defendant’s sentence above an otherwise binding sentencing-

guideline limit. This Court, in United States v. Booker, No. 04-

104, and United States v. Fanfan, No. 04-105, is currently

considering whether the Blakely decision applies to factual

findings under the Federal Sentencing Guidelines that similarly

allow courts to impose harsher sentences than otherwise would

be permissible.

As the Sixth Circuit already has acknowledged (App. 1),

this case presents the same issues as Booker and Fanfan and

should be disposed with in accordance with those upcoming

decisions. Based solely on the facts here “reflected in the jury

verdict,” Blakely, 124 S. Ct. at 2537 — that is, based solely on

the elements of Petitioner’s crimes of conviction — the

maximum sentence Petitioner could receive was 6 months. Yet

based on judicial factfinding (none of which even arguably

pertained to prior convictions or any other offender

characteristic), the district court increased Petitioner’s “offense

level” from 6 to 18, exposing Petitioner to a 33-month sentence,

and sentencing him to 27 months in prison — a sentence almost

two years longer than he otherwise could have received.

6

Accordingly, assuming this Court holds in Booker and

Fanfan that Blakely applies to the Federal Sentencing

Guidelines, this Court should grant, vacate, and remand this

case so that the district court can revisit Petitioner’s sentence in

light of Booker and Fanfan.

Il. The Sixth Circuit’s Use Of A New Guideline

Amendment To Uphold Petitioner’s Sentence

Violated The Ex Post Facto Clause.

Instead of (or in addition to) merely vacating and

remanding this case in light of Booker and Fanfan, this Court

may wish immediately to address an additional issue in this

case: the Sixth Circuit’s improper use of an amendment to the

Guidelines that post-dated Petitioner’s conduct to uphold his

sentence.

Former Guidelines subsection 2F1.1(b)(1) (now §

2B1.1(b)(1)) mandates that a sentencing court increase a

defendant’s offense level in fraud cases according to the amount

of “loss” or “intended loss” involved in the case. At the time of

Petitioner’s conduct, the Sixth Circuit interpreted the Guidelines

to prohibit courts from sentencing a defendant based upon an

intended loss that was “impossible” to cause. F.g., United

States v. Watkins, 994 F.2d 1192, 1196 (6th Cir. 1993).

In calculating the amount of the “loss” here, the district

court included $50,393.53 in personal expenses that was listed

on the cost report for one of Petitioner’s clinics. Petitioner

argued on appeal, however, that “it was impossible for him to

have caused Medicare/Medicaid any loss by including [this

amount] on the cost report because the clinic had already

reached its maximum reimbursement rate.” App. 23 (emphasis

added). The Sixth Circuit, however, rejected Petitioner’s

argument on the ground never even advanced by the

Government: that a 2001 amendment to the Guidelines —

enacted three years after Petitioner’s conduct — clarified that the

66ee

“loss” for sentencing purposes “‘includes intended pecuniary

7

harm that would have been impossible or unlikely to occur.’”

App. 23 (quoting § 2Bl1.1, comment n.3(A)(ii)) (emphasis

added).

This retroactive use of a Guideline amendment violated

the Ex Post Facto Clause. This Court held in Miller v. Florida,

482 U.S. 423 (1987), that applying an amendment to a

sentencing guidelines scheme (there, Florida sentencing

guidelines) to crimes that occurred before the provision’s

enactment violated the Ex Post Facto Clause. The only

potential distinction between Miller and this case is that the

amendment in Miller unambiguously changed the meaning of

the guidelines, while the amendment here resolved a circuit split

over the meaning of a guideline provision, see, e.g., United

States v. Geevers, 226 F.3d 186, 195 (3rd Cir. 2000) (noting

circuit split). But prior to the Sixth Circuit’s decision here, the

federal circuit courts correctly had held that this distinction

makes no difference when the amendment “changes the law and

the meaning and effect of the guidelines in [the] circuit [at

issue],” to the detriment of the defendant. United States v.

Smallwood, 35 F.3d 414, 417-19 n.8 (9th Cir. 1994) (emphasis

added); accord United States v. Brennan, 326 F.3d 176, 197-98 |

(3rd Cir. 2003) (“[W]here an amendment overrules a prior

judicial construction of the guideline,” it is a substantive change

that implicates the Ex Post Facto Clause.); United States v.

Saucedo, 950 F.2d 1508, 1515 (10th Cir. 1991) (The

amendment “‘is a substantive change to § 3B1.1 in this circuit,

thereby implicating the ex post facto clause.”).

That is the case here. As the Sixth Circuit has

acknowledged, the amendment to § 2Bl1.1 “effectively

overruled the Sixth Circuit’s practice” of disallowing sentences

where the district court sentenced the defendant on the basis of a

loss it would have been impossible to cause. United States v.

McBride, 362 F.3d 360, 374 (6th Cir. 2004). The Sixth Circuit

here gave no reason at all as to why it had the constitutional

authority to apply this change in law retroactively to Petitioner’s

conduct.

Perhaps realizing the problem with this retroactive

application, the Sixth Circuit stated that its use of the 2001

amendment is “inconsequential to this case because removing

$50,393.53 from the loss calculation . . . would not have

affected Defendant’s offense level” because “[r]emoving that

amount would have resulted in a loss of $206,461.43,” an

amount still above the $200,000 threshold for the 8-level

increase. App. 21 n.4; accord App. 23 & n.5; see also §

2F1.1(b)(1)1) (2001) (8-level increase for loss above $200,000

and $350,000). While this may be true at present, the

applicability of the 2001 amendment is almost certain to matter

if this Court’s decisions in Booker and Fanfan permit the

district court to re-sentence Petitioner based in part on the

amount of loss, and the Government seeks such a re-sentencing.

The district court noted in the sentencing hearing that

$206,461.43 was only a “reasonable estimate” of the remaining

loss and that the true amount “may vary 10, maybe even 20

percent” from the $206,461.43 figure. Sentencing Tr. at 75. If

a jury found that the true loss figure was at least 4 percent

smaller than the district court’s estimate (or if the parties enter

into such a stipulation on remand), this would shrink the loss

below $200,000 and reduce Petitioner’s offense level

accordingly.?

2 The Sixth Circuit also suggested in a footnote that it may have been

possible for the inclusion of Petitioner’s personal expenses in the cost report

to cause an actual loss for Medicare/Medicaid “by way of an increase in

future rates of reimbursement.” App. 23 n.5. But this does make the Ex Post

Facto problem here go away either. The possibility of such a loss was never

proven by a preponderance of the evidence, much less beyond a reasonable

doubt. And even if it had been so proved, there is absolutely nothing in the

record to suggest the cost report could have caused the future reimbursement

rates to increase by anything approaching the full $50,393.53 the district

court included in its loss calculation.

9

CONCLUSION

For the forgoing reasons, the petition for writ of

certiorari should be granted.

Respectfully submitted,

Jeffrey L. Fisher

(Counsel of Record)

Davis Wright Tremaine LLP

2600 Century Square

1501 Fourth Avenue

Seattle, Washington 98101-1688

(206) 622-3150

December 28, 2004 Attorneys for Petitioner

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App. 1

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES

OF AMERICA,

)

)

Plaintiff — Appellee

v. ) No. 02-6013

P.G. RAITHATHA,

Defendant — Appellant )

DENIAL OF DEFENDANT - APPELLANT’S

PETITION FOR PANEL REHEARING IN

LIGHT OF THE SUPREME COURT DECISION

IN BLAKELY v. WASHINGTON

(Filed Sep. 29, 2004)

Defendant-Appellant has filed a Petition for Panel

Rehearing following the Supreme Court decision in

Blakely v. Washington.

Defendant-Appellant’s Petition is DENIED.

In United States of America v. Robert Koch an en banc

court of the United States Court of Appeals for the Sixth

Circuit ordered on August 13, 2004 that the decision of the

United States Supreme Court in Blakely v. Washington,

124 S.Ct. 2531 (2004) does not invalidate the appellant’s

sentence under the Federal Sentencing Guidelines. The en

banc court held that this Order was entered in the interest

of judicial economy and pending a definitive ruling by the

Supreme Court.

App. 2

IT IS SO ORDERED.

ENTERED BY ORDER

OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

App. 3

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plain tiff-Appellee,

v. No. 02-6013

P.G. RAITHATHA,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Kentucky at London.

No. 00-00041 — Karl S. Forester, Chief District Judge.

Argued: January 29, 2004

Decided and Filed: September 29, 2004

Before: MERRITT and SUTTON, Circuit Judges;

FEIKENS, District Judge.*

COUNSEL

ARGUED: Glenn V. Whitaker, VORYS, SATER, SEY-

MOUR & PEASE, Cincinnati, Ohio, for Appellant. David

P. Grise, ASSISTANT UNITED STATES ATTORNEY,

Lexington, Kentucky, for Appellee. ON BRIEF: Glenn V.

Whitaker, Eric W. Richardson, VORYS, SATER, SEY-

MOUR & PEASE, Cincinnati, Ohio, for Appellant. David

P. Grise, Charles P. Wisdom, Jr., ASSISTANT UNITED

STATES ATTORNEYS, Lexington, Kentucky, for Appellee.

* The Honorable John Feikens, United States District Judge for

the Eastern District of Michigan, sitting by designation.

App. 4

AMENDED OPINION

FEIKENS, District Judge.

I. INTRODUCTION

Defendant, Dr. P.G. Raithatha, was convicted by a

jury of scheming to defraud private health insurance

companies and Medicare/Medicaid, in violation of 18

U.S.C. § 1347, and of making false statements to the

Department of Labor (DOL) and to the Immigration and

Naturalization Service (INS), in violation of 18 U.S.C.

§ 1001. Defendant was sentenced to 27 months of impris-

onment. Defendant appeals his conviction and sentence.

On appeal, Defendant argues: (1) the jury's conviction

as to all counts should be reversed because Defendant

alleges there is insufficient evidence to sustain his convic-

tion, or alternatively, that Defendant should be granted a

new trial; and (2) the district court erred in attributing

any loss figure to Defendant as to Counts 1 through 20,

and that therefore the district court’s loss calculations for

sentencing purposes should be reversed.’

* On May 19, 2004, this Court issued an Opinion affirming

Defendant’s conviction and sentence. Subsequently, on June 2, 2004,

Defendant filed a Petition for Panel Rehearing. Now, in accordance with

Rule 40(a)(4) of the Federal Rules of Appellate Procedure, this Court

grants Defendant’s Petition for Panel Rehearing and makes a final

disposition of this case without reargument in this Amended Opinion.

App. 5

II. FACTUAL BACKGROUND

A. Defendant’s Medical Practice

Defendant is a physician who owned and operated two

clinics in 1997, the McKee Medical Center in McKee,

Kentucky, and the Richmond Medical Center in Richmond,

Kentucky. In 1997, defendant sold the clinics to Mountain

After Hours Clinic Corporation (“MAHC”). As part of the

sale, defendant became an employee of MAHC and was

issued one-sixth of the shares of stock in MAHC. By 1998,

MAHC owned four other clinics in Hazard, Nicholson,

London, and Somerset, Kentucky.

During 1997, when defendant owned the McKee and

Richmond clinics, the billing for both clinics was done at

the McKee clinic. Tammy Spurlock, defendant’s office

manager, testified that she, Beverly Lainhart, and Renee

Hudson did billing work. Between January and December

of 1998, all billing for the six MAHC clinics was performed

by an outside billing service, Office Management Services

(“OMS”). In April of 1999, OMS stopped providing billing

services for MAHC, and the McKee clinic began doing

billing for all of the clinics.

To bill its services, a medical clinic issues an invoice to

the patient’s insurer that contains a current procedure

terminology (“CPT”) code. The CPT code indicates to the

insurer the level of service rendered by the clinic and the

amount of reimbursement owed to the clinic. When a

medical practitioner sees a patient, the practitioner

- records a CPT code on an “encounter form” to record the

services performed. The CPT codes for established pa-

tients range from the least expensive, 99211, to the most

expensive, 99215. The CPT codes for new patients range

from the least expensive, 99201, to the most expensive,

App. 6

99205. (Cost. Tr. 53.) One type of “up-coding” scheme

occurs where the CPT numbers are changed on the en-

counter forms and/or billing sheets sent to the insurance

companies so that it appears as if the clinic performed

more expensive services than were actually provided.

In 1998, defendant helped recruit seven foreign

physicians for MAHC. Defendant recruited them under a

program that allows foreign doctors to stay in the United

States if they secure employment in medically under-

served areas. Under this program, MAHC had to meet

several requirements including submitting a Labor Condi-

tion Application (“LCA”) to the DOL, and a Petition for

Nonimmigrant Worker (an “I-129 form”) to the INS,

setting forth information such as the physician’s wage, for

each physician hired. MAHC was required to pay each

foreign doctor no less than the prevailing wage for the

area — the average wage paid to physicians in the area for

comparable work.

The McKee clinic was designated a “rural health

clinic” by Medicare. As a rural health clinic, the McKee

clinic was reimbursed a flat rate for each Medi-

care/Meditaid patient it saw, regardless of the treatment

rendered. The McKee clinic was required to submit to

Medicare a yearly “cost report” — a summation of the costs

incurred by the clinic in treating patients. Once a clinic

reached the maximum reimbursement rate set by Medi-

care/Medicaid, additional expenses on the cost report were

not reimbursed during that year. However, reported costs

were used to calculate future Medicare/Medicaid reim-

bursement rates per patient. (Shreve, Tr. 100.)

In May 1998, a cost report was prepared for the

McKee clinic for the period of October 1, 1996 through

App. 7

September 30, 1997, which included $50,393.53 of defen-

dant’s personal expenses. Defendant alleges that when

defendant operated as a sole proprietor of the Richmond

and McKee clinics, prior to their purchase by MAHC,

defendant “often used business checks to pay personal

expenses and would, at the end of the year, separate the

personal and business expenses in order to prepare the

corporation’s tax returns.” (Def. Br. 113.) Defendant

contends that his personal expenses were inadvertently

included on the cost report.

B. Prosecution of Defendant

On July 24, 2000, a twenty-count indictment was filed

against Defendant. Counts 1 and 4 charged Defendant

with defrauding private insurance companies in 1997

(Count 1) and 1998 and 1999 (Count 4), in violation of 18

U.S.C. § 1347. Counts 1 and 4 charged Defendant with

instructing billing staff to: (a) raise the CPT codes on

invoices when the physician had reported a lower level of

service; (b) submit invoices to insurance companies for

services performed by other physicians, as if Defendant

had performed them; and (c) submit claims with a diagno-

sis listing an illness, when the patient did not have an

illness. (Indictment, 2-3, 8-10.)

Counts 2 and 5 charged Defendant with scheming to

defraud Medicare/Medicaid in 1997 (Count 2) and 1998

and 1999 (Count 5), in violation of 18 U.S.C. § 1347.

(Indictment, 4-6, 10-12.) Counts 2 and 5 charged Defen-

dant with causing patients to present themselves for

medically-unnecessary visits by: (a) refusing to authorize

refills on prescriptions and preventing employees from

authorizing refills of prescriptions; (b) making unannounced

App. 8

and unrequested home visits to patients; (c) approaching

people on the street and ushering them into the clinic for

unscheduled examinations; (d) examining people who had

come into the clinic for non-medical reasons, such as to

pay debts owed to Defendart; (e) ordering medical tests |

not related to patients’ conditions; (f) falsely representing

that other physician employees had specialties so that

patients would be examined an additional time by a

“specialist”; and (g) refusing to give test results until an

additional appointment was kept. (Indictment, 4-6, 10-12.)

Count 3 charged Defendant with defrauding Medi-

care/Medicaid, in violation of 18 U.S.C. § 1347, by submit- |

ting a cost report for 1997 that included personal expenses |

unrelated to patient care. Included in those expenses was

money which was actually spent to furnish and complete

Defendant’s home. (Indictment, 6-7.)

Counts 6 through 13 charged Defendant with submit-

ting false statements to the DOL, in violation of 18 U.S.C.

§ 1001, by submitting LCAs that misstated the salaries of

seven foreign physicians employed by MAHC. The indict-

ment charged defendant as “the person in charge of

recruiting physicians for the Corporation.” (Indictment,

12.) The indictment alleged that the “forms falsely over-

stated the salary to be paid to the physicians, in order to

disguise the fact that the physicians were being paid less

than the required amount.” (Indictment, 13.)

Counts 14 through 20 charged Defendant with sub-

mitting false statements to the INS, in violation of 18

U.S.C. § 1001, by submitting I-129 forms that misstated

the salaries of the seven foreign physicians identified in

Counts 6 through 13. (Indictment, 15-16.)

Defendant pleaded not guilty to all counts.

ee |

App. 9

Trial began on July 2, 2001, before Chief Judge Karl

S. Forester. Defendant moved for a judgment 2f acquittal.

The district court denied the motion. On J uly 19, 2001, the

jury returned a guilty verdict as to all counts (Counts 1

through 20). Defendant timely moved for a new trial. On

September 12, 2001, the district court denied the motion

for a new trial. This appeal followed, both as to Defen-

dant’s conviction and sentence as to all counts.

C. Presentence Investigation Report (PSR)

Loss Calculation

The probation office determined that it would be

difficult to discern an actual loss figure for Counts 1 and 4,

but that an intended loss figure could be calculated “for

the up-coding conduct which occurred in 1999.” Therefore,

the PSR calculated an intended loss figure of $206,461.43

for Counts 1 and 4, based on evidence of defendant’s up-

coding scheme. The PSR calculated an intended loss figure

of $50,393.53 for Count 3, equal to the amount of defen-

dant’s personal expenses which were included in the cost

report submitted to Medicare/Medicaid. The probation

office determined that an intended loss amount for Counts

2 and 5, related to defrauding Medicare/Medicaid, could

not be quantified. Thus, the PSR recommended that a

total intended loss figure of $256,854.96 ($206,461.43 +

$50,393.53) should be attributed to defendant as to Counts

1 through 5.

The PSR arrived at the intended loss figure of

$206,461.43 for Counts 1 and 4 through a complex series

of ten steps. First, the probation office went through

encounter forms seized from the McKee Medical Center on

November 17, 1999, and extracted all of the encounter

App. 10

forms from 1999 for patients with private insurance that

were marked with 99211, 99212, 99201, and 99202 CPT

codes. Second, the encounter forms in each CPT code

category were counted. Third, of the sixty-four private

insurance companies billed by MAHC in 1999, a sample of

ten insurance companies were contacted to determine

their usual and customary charges for each CPT code.

Fourth, using the customary charges for each CPT

code at each of the ten selected insurance companies, the

probation office computed the payment difference that

would have resulted had each category of CPT codes been

up-coded and billed at a higher CPT code. For example,

the probation office calculated the payment difference

between 99211 to 99213 to determine the amount of loss

each of the ten insurance companies would have suffered

had encounter forms marked with a 99211 been up-coded

and billed under a 99213 CPT code. The probation office

determined the payment differences between the following

additional CPT categories for each of the ten insurance

companies: 99212 to 99213, 99201 to 99203, and 99202 to

99203.

Fifth, an average payment difference was computed

for each of the above categories of possible CPT up-codes.

For example, the probation office determined that the

average payment difference between services coded 99211

and 99213 was $28.24. (PSR, 7 50-54.) Sixth, the number

of encounter forms in each CPT category (determined in

step 2) was multiplied by the average payment difference

for each category (determined in step 5) to calculate an

intended loss figure for each category of CPT codes. For

example, for CPT code 99211, the probation office calcu-

lated an intended loss figure for 1999 of $35,221.10 by

multiplying $28.45 (the average payment difference

App. 11

between 99211 and 99213) by 1,238 (the number of 99211

encounter forms for 1999 seiz J from the McKee Clinic).

Seventh, the intended loss figures for each CPT category

were added together to come up with a total intended loss

figure for 1999 of $112,820.45. This figure represents the

loss which would have occurred had each claim in each

CPT category for 1999 been up-coded. (PSR, J 55-56.)

Eighth, the probation office determined an intended

loss figure for 1998 of $56,410.23, by backtracking from

the intended loss figure calculated for 1999. The probation

office determined that defendant had “extensive control”

over the billing of three of the six clinics in the MAHC

system during 1998, when the billing for MAHC was

conducted by OMS. (PSR, { 57.) Therefore, the probation

office calculated the intended loss figure for 1998 by

multiplying the intended loss figure for 1999 by 50%.

Ninth, the probation office determined an intended

loss figure for 1997 of $37,230.75. Since defendant oper-

ated only two clinics in 1997, the probation office calcu-

lated an intended loss for 1997 by multiplying the

intended loss figure for 1999 by 33%. (PSR, { 58.) Finally,

the probation office added together its intended loss

calculations for 1999, 1998, and 1997 to arrive at a total

loss calculation of $206,461.53 for Counts 1 and 4. (PSR,

q 59.)

For Counts 6 through 20, the probation office calcu-

lated an actual loss figure of $216,833.94. (PSR, { 73.)

This was based on the amount of pay the foreign physi-

cians were entitled to but did not receive during their

employment with MAHC. (PSR, 473.) For Counts 6

through 20, the probation office calculated an intended

loss of $523,670.00. This figure equals the difference

App. 12

between the wage reported to the United States minus the

contract amount, multiplied by the number of years of the

contract, for each foreign physician. This intended loss

amount represents the amount of money per contract that

MAHC stood to gain by illegally paying its foreign physi-

cians below the prevailing wage. The probation office used

the intended loss calculation for Counts 6 through 20

($523,670.00), because it was greater than the calculated

actual loss, and combined it with the intended loss calcula-

tion for Counts 1 through 5 ($256,854.96) to calculate a

total intended loss figure for Counts 1 through 20 of

$780,524.96.

Based on this loss calculation, the probation office

recommended a total offense level of 20. U.S.S.G § 2F1.1

calls for a base offense level of 6 for violations of 18 U.S.C.

§ 1347 and § 1001. The PSR recommended a 10 level

increase because the intended loss totaled more than

$500,000 but less than $800,000. U.S.S.G. § 2F1.1(b)(1)(K).

The PSR recommended a 2 level increase because the

offense included more than minimal planning, and an

additional 2 level increase because the abuse of a private

trust facilitated the offense. Thus the PSR recommended a

base offense level of 6 plus a 14 level increase, for a total

offense level of 20. Based on the recommended total

offense level of 20 and Defendant’s criminal history cate-

gory of I, the PSR recommended a guideline range for

imprisonment of 33 to 41 months.

D. Defendant’s Sentencing

On August 2, 2002, the district court sentenced

Defendant to 27 months. The district court did not order

restitution. (Sentencing, Tr., 37.) The district court

App. 13

adopted the PSR’s calculation of an intended loss of

$206,461.43 for Counts 1 and 4, and an intended loss of

$50,393.53 for Count 3, for a total intended loss of

$256,854.96 for Counts 1 through 5.

With regards to Counts 6 through 20, the district

court adopted the PSR’s actual loss calculation of

$216,833.94, after determining that the intended loss

calculation relating to Counts 6 through 20 was too specu-

lative. (Sentencing, Tr. 77-80.) However, because the court

determined that the conduct charged in Counts 6 through

20 fell outside the heartland of cases that U.S.S.G. § 2F1.1

(the applicable Sentencing Guideline) was designed to

address, the court decided not to hold Defendant account-

able for the actual loss caused by his alleged conduct in

Counts 6 through 20. Accordingly, the district court deter-

mined that the total loss attributable to Defendant was

$256,854.96 (the intended loss calculated for Counts 1

through 5 minus the actual loss calculated for Counts 6

through 20).

Applying U.S.S.G. § 2F1.1, the district court deter-

mined that the base offense level was 6, and added 4

points as recommended in the PSR because the offense

involved more than minimal planning and the violation of

a private trust. The district court added an 8 level increase

because the amount of loss it determined was attributable

to Defendant was above $200,000 and below $350,000.

U.S.S.G. § 2F1.1(b)(1)(ID. Thus, the district court assessed

a total offense level of 18, for which the applicable guideline

range was 27 to 33 months. (Sentencing Tr. 86.) The district

court sentenced Defendant to 27 months of imprisonment

and two years supervised release on each count to be

served concurrently. (Sentencing Tr. 95.) Now Defendant

appeals both his conviction and sentence as to all counts.

App. 14

III. ANALYSIS

A. SUFFICIENCY OF EVIDENCE

1. Standard of Review

When evaluating a claim of insufficient evidence, a

reviewing court must determine “whether, after viewing

the evidence in the light most favorable to the prosecution,

any rational trier of fact could have found the essential

elements of thé crime beyond a reasonable doubt.” U.S. v.

Harris, 293 F.3d 970, 974 (6th Cir. 2002) (citing Jackson v.

Virginia, 443 U.S. 307, 319 (1979) (emphasis in original)).

A defendant claiming insufficiency of evidence bears a

“very heavy burden.” US v. Vannerson, 786 F.2d 221, 225

(6th Cir. 1986). “[C]ircumstantial evidence alone can

sustain a guilty verdict.” US v. Ellerbee, 73 F.3d 105, 107

n.2 (6th Cir. 1996) (citation omitted). The evidence need

not remove every possible hypothesis except that of guilt.

US v. Williams, 195 F.3d 823, 826 (6th Cir. 1999) (citations

omitted).

2. Health Care Fraud (Counts 1-5) - 18

U.S.C. § 1847

To convict a defendant of health care fraud under 18

U.S.C. § 1347, the Government must demonstrate that the

defendant: (1) knowingly devised a scheme or artifice to

defraud a health care benefit program in connection with

the delivery of or payment for health care benefits, items,

or services; (2) executed or attempted to execute this

scheme or artifice to defraud; and (3) acted with intent to

defraud. (Jury Instruction No. 12, July 19, 2001.) The

defendant must have intended, through some deception,

“to induce another to part with property or to surrender

some legal right.” US v. Frost, 125 F.3d 346, 354 (6th Cir.

App. 15

1997) (cited in U.S. v. DeSantis, 134 F.3d 760, 764 (6th Cir.

1998)).

Defendant argues there is insufficient evidence to

sustain his conviction for Counts 1 and 4, defrauding or

attempting to defraud private health insurance compa-

nies. However, many staff members testified that Defen-

dant instructed them to bill office visits covered by private

insurance under CPT codes 99213 or 99203, regardless of

the CPT code entered by the attending physician on the

encounter form. The staff members were aware that this

“up-coding” scheme resulted in higher reimbursement

from private insurance companies. (Justice, Tr. 164.) After

the FBI searched the McKee clinic and Defendant’s home

and seized encounter forms, insurance information, and

records, staff members testified that the up-coding ceased.

(Howard, Tr. 76-77.)

In addition, staff members testified that Defendant

routinely ordered tests unrelated to his patients’ condi-

tions and supported the tests with false diagnoses.

(Meadors, Tr. 5-10.) Zeren, a nurse practitioner working at

the McKee clinic, testified that after she performed sports

physicals on children at local schools and found no indica-

tion of upper-respiratory infections, Defendant, who had

not been present at the examinations, falsely diagnosed

them as having upper respiratory infections. (Zeren, Tr.

45-51.) Taking this evidence in the light most favorable to

the prosecution, a reasonable juror could have found

Defendant guilty of defrauding or attempting to defraud

private insurance companies, as charged in Counts 1 and

4.

Defendant argues there is insufficient evidence to

sustain his conviction for Counts 2 and 5, defrauding

App. 16

Medicare/Medicaid by causing patients to come into

Defendant’s clinics for medically unnecessary examina-

tions or treatments. However, physicians working for

Defendant testified that Defendant told them to bring

Medicaid patients back for additional office visits, instead

of giving them a prescription with refills, so that Medicaid

could be billed for additional visits. (Patel, Tr. 25-26.) Staff

members testified that when business was slow, Defen-

dant solicited patients from the street and billed them as

office visits. (Justice, Tr. 183.) Staff members testified that

people would come into the office for purposes unrelated to

receiving medical care, such as paying debts to Defendant,

and “before they left, they were a patient,” and billed as a

patient. (Amon, Tr. 114.) Taking this evidence in the light

most favorable to the prosecution, a reasonable juror could

have found Defendant guilty of defrauding or attempting to

defraud Medicare/Medicaid, as charged in Counts 2 and 5.

Defendant also argues there is insufficient evidence to

sustain his conviction for Count 3, defrauding Medi-

care/Medicaid by including personal expenses in a cost

report submitted to Medicare/Medicaid for the McKee

Clinic in 1997. The cost report included expenses for

Defendant’s personal residence totaling $50,393.53.

Though Defendant did not sign the report, he was given an

opportunity to review it before it was submitted. (Lynn, Tr.

131-132.) When Defendant purchased a TV and stereo

system for his residence he instructed the salesman to

issue the invoice to the McKee Clinic, as if the items had

been purchased by the clinic and not for Defendant’s

personal use. (Miller, Tr. 203; Ware, Tr. 198.) Taking this

evidence in the light most favorable to the prosecution, a

reasonable juror could have found that Defendant intended

jt

|

App. 17

to defraud Medicare/Medicaid by including personal ex-

penses on the cost report submitted to Medicare/Medicaid.’

3. Making False Statements (Counts 6-20)

- 18 U.S.C. § 1001

In order to establish a violation of 18 U.S.C. § 1001,

the Government must demonstrate that: (1) the defendant

made a statement; (2) the statement is false or fraudulent;

(3) the statement is material; (4) the defendant made the

statement knowingly and willfully; and (5) the statement

pertained to an activity within the jurisdiction of a federal

agency. US v. Logan, 250 F.3d 350, 361 (6th Cir. 2001)

(citations omitted). A statement is “material” if it “has the

natural tendency to influence, or is capable of influencing,

the federal agency.” Jd. at 361 (citations omitted).

Defendant argues there is insufficient evidence to

sustain his conviction for making false statements or

causing false statements to be made to the DOL and the

INS, regarding the salaries of seven foreign physicians

employed by MAHC. For each foreign physician hired,

MAHC was required to file an LCA with the DOL and an I-

129 form with the INS stating the employee’s prevailing

wage salary. The evidence demonstrated that the submitted

? In Defendant’s Petition for Panel Rehearing, Defendant inappro-

priately attempts to reargue the sufficiency of the evidence underlying

his convictions. This Court adequately addressed and rejected Defen-

dant’s arguments regarding the sufficiency of the evidence in its

Opinion, by summarizing the evidence against Defendant and citing, by

way of example, to the testimony of a few of the many witnesses who

provided testimony supporting Defendant’s convictions. It is clear that

after taking all of the evidence in the record in the light most favorable

to the prosecution, a reasonable juror could have found Defendant

guilty of Counts 1 through 5.

App. 18

LCAs and [-129 forms overstated the salary MAHC

actually paid the foreign physicians. Defendant’s payroll

manager testified that she signed the LCAs and I-129

forms at Defendant’s direction. (Bowling, Tr. 13.)

In addition, several foreign physicians testified to

Defendant’s role in making contracts with the physicians, —

after the forms had been submitted to the DOL and the

INS, that reduced the physician’s salary from that stated

on the submitted forms. (Dani, Tr. 37-39.) One physician

testified that Defendant threatened her with visa prob-

lems when she questioned having to sign an amendment

to her original contract (for $110,000/year) which reduced

her salary to $70,000/year. (Ravisankar, Tr. 6-9.) Taking

this evidence in the light most favorable to the prosecu-

tion, a reasonable juror could have found that defendant

was guilty of intentionally causing false statements to be

made to the DOL and INS. 7

Defendant argues that his conviction on Counts 7 and

15, charging defendant with causing false statements to be

made to the DOL and INS about one of the foreign physi-

cians, Dr. Vivek Patel, should be reversed. Defendant con-

tends that the forms submitted by the government are forms

which were actually prepared and submitted for Dr. Divya

Joshi, and not for Patel. With regard to defendant’s conten-

tion as to Counts 7 and 15, the record is abundantly clear

that such false statements were made. Defendant’s conten-

tion that certain forms referring to another physician were

submitted mistakenly for Patel is thereiore harmless error.”

* In Defendant's Petition for Panel Rehearing, Defendant again

argues that Defendant’s convictions as to Counts 7 and 15 should be

reversed, and asserts that “the Government cannot point to any forms

(i.e. any allegedly false statements) actually submitted as to Dr. Patel.”

(Continued on following page)

App. 19

B. AMOUNT OF LOSS ATTRIBUTED TO DE-

FENDANT FOR SENTENCING

1. Standard of Review

A court of appeals reviews de novo a sentencing court’s

interpretation of the Sentencing Guidelines, but must

(Def. Pet. Panel Rehearing, 12.) Defendant is mistaken. The record

contains an LCA and an I-129 form for each of the 7 physicians,

including Patel, about whom Defendant was convicted of causing false

statements to be made (for a total of 14 statements).

The LCA for Patel, which corresponds to Count 8, is dated July 14,

1998 and appears as the first page of Government Exhibit 8A. (J.A.

1946.) The I-129 form for Patel, which corresponds to Count 15, is dated

July 14, 1998 and appears (somewhat confusingly) as the next three

pages of Government Exhibit 8A. (J.A. 1947-49.) The LCA and I-129

form for Dr. Joshi, which correspond to Count 6 and Count 14, are

dated March 20, 1998 and appear respectively as Government Exhibit

6A and 14A. Thus, the record supports Defendant’s conviction for

causing false statements to be made regarding both Patel and Joshi,

and Defendant’s argument with respect to Count 15 has no merit.

While the record supports Defendant’s conviction as to making two

false statements regarding Patel, Defendant was actually convicted of

making three false statements regarding Patel. In addition to Counts 8

and 15, Defendant was also convicted of Count 7, for allegedly submit-

ting a second false LCA regarding Patel. Defendant’s conviction as to

Count 7 may have been in error, because the LCA submitted as

Government Exhibit 7A (for Count 7), allegedly the second LCA for

Patel, appears to be an exact copy of the LCA submitted as Government

Exhibit 6A (for Count 7), the LCA for Joshi. Thus, it appears that a

single document was used erroneously by the Government as the basis

to convict Defendant for both Counts 6 and 7.

However, as this Court noted in our Opinion, any error with regard

to Defendant’s conviction as to Count 7 is “harmless.” The district court

did not attribute any loss to Defendant as to Counts 6 through 20.

(Sentencing Tr. 84-86, J.A. 1096-98.) The district court sentenced

Defendant to 27 months on each count to be served concurrently.

(Sentencing Tr. 94-96, J.A. 1100-1101.) Therefore, Defendant’s convic-

tion as to Count 7 did not affect Defendant’s sentence, and this Court

properly considered any error with regard to Defendant’s conviction for

Count 7 to be harmless.

App. 20

uphold a sentencing court’s factual findings unless “clearly

erroneous.” US v. Ware, 282 F.3d 902, 907 (6th Cir. 2002).

A factual finding is “clearly erroneous” when “the review-

ing court on the entire evidence is left with the definite

and firm conviction that a mistake has been committed.”

Id. (citing US v. U.S. Gypsum Co., 333 U.S. 364, 395

(1948)).

A sentencing court “need not determine the amount of

loss with precision.” US v. Kohlbach, 38 F.3d 832, 835 (6th

Cir. 1994) (citations omitted). A sentencing court “need

only make a reasonable estimate, given the available

information.” US v. Guthrie, 144 F.3d 1006, 1011 (6th Cir.

1998). A defendant who challenges such a computation

must carry the burden of demonstrating “that the court’s

evaluation of the loss was not only inexact but outside the

universe of acceptable computations.” US v. Tardiff, 969

F.2d 1283, 1288 (1st Cir. 1992) (cited in Kohlbach, 38 F.3d

at 841).

For sentencing purposes, a defendant will be held

accountable for the actual or intended loss to a victim,

whichever is greater, or a combination thereof. US v.

Wade, 266 F.3d 574, 586 (6th Cir. 2001). See also U.S.S.G.

§ 2F1.1, comment. n. 7. “[S]o long as the intended loss is

supported by a preponderance of the evidence, the district

court may use it in reaching the appropriate offense level.”

US v. Logan, 250 F.3d 350, 371 (6th Cir. 2001). In 2001,

amendments to the Sentencing Guidelines clarified that

“intended loss” means “the pecuniary harm that was

intended to result from the offense” and “includes intended

pecuniary harm that would have been impossible or

CC nner A i A ad 6 ls Sa OO Ne

App. 21

unlikely to occur.” § 2B1.1, comment. n.3(A)(ii) (emphasis

added).*

2. Loss Calculation

In this case, the only amounts of loss attributed to

Defendant, and thus at issue on appeal, are $206,461.43

for Counts 1 and 4 and $50,393.53 for Count 3. Defendant

argues the loss calculation for Counts 1 and 4 adopted by

the district court is based on speculation. Defendant

argues that there is no evidence that he ordered “all”

encounter forms to be up-coded, that all of the encounter

forms in the Government’s sample were not up-coded, and

that there was never an order to up-code new patient

forms or to up-code defendant’s encounter forms and that

therefore neither of these should have been included in the

loss calculation. Defendant argues the intended loss

calculation as to Count 3 is clearly erroneous because it

was allegedly impossible for him to inflict the amount of

loss for which the district court held him accountable.

Unlike the contentions of Defendant as to evidence

regarding his conviction, his contentions regarding Counts

1, 4, and 3 relate only to sentencing procedures. Defendant

was found guilty of the charges in these counts and our

* This Court’s reference to the 2001 amendments to the Sentencing

Guidelines are inconsequential to this case because removing

$50,393.53 from the loss calculation — an intended loss amount

attributed to Defendant by the district court as to Count 3 that

Defendant argues was impossible for him to inflict - would not have

affected Defendant’s offense level. Removing that amount would have

resulted in a loss amount of $206,461.43, and the same 8 level increase

in effect prior to the 2001 amendments.

App. 22

inquiry goes only to the amount of loss for which Defen-

dant may be held accountable.

As to the loss calculation regarding Counts 1 and 4,

Defendant contends there was no evidence that any order

was given to up-code new patient CPT codes (the “9920-”

series). The record shows otherwise:

Q. “Okay. Now, did he also give you orders to up-code

a 99201 code ‘o a higher-paying code?”

A. “We was [sic] wld to up-code any office visit like

that.”

Q. “Okay. All Right. So he told you to code a 99201

up to the highest level that you could do, 99203?”

A. “Yea.”

(Lainhart, Tr. 40-41.) Defendant suggests that his encoun-

ter forms were erroneously included in the loss calcula-

tion. However, the Government stated unequivocally at

Defendant’s sentencing hearing that “Dr. Raithatha’s

forms were not counted in the encounter forms for the

1999 figures that were given to the probation office.”

(Grise, Sentencing, Tr. 74.)

In addition, the selection of the ten most frequently

billed insurance companies to provide figures upon which

to compute average pay differences between CPT code

categories was reasonable. Furthermore, Defendant’s

argument that all of the encounter forms in the Govern-

ment’s sample were not up-coded goes to actual loss, and

therefore does not disturb the district court’s calculation of

intended loss. Finally, the use of the 1999 intended loss

amount to calculate the lesser intended loss amounts for

1998 and 1997 was reasonable. Therefore, it was not

clearly erroneous for the district court to hold Defendant

App. 23

accountable for an intended loss of $206,461.43 as to 1 and

4. Defendant has failed to demonstrate that the loss

calculation as to Counts 1 and 4 was “outside the universe

of acceptable computations.” Kohlbach, 38 F.3d at 841.

With regards to Count 3, Defendant argues that no

loss should be attributed to him because he contends that

it was impossible for him to have caused Medicare

Medicaid any loss by including the $50,393.53 in personal

expenses on the cost report because his clinic had already

reached its maximum reimbursement rate. (Appellant, Br.

62.) However, loss can be attributed to a Defendant based

on a finding of actual loss or intended loss, and a finding of

intended loss is not limited to those losses possible to

inflict, or those gains possible for a Defendant to achieve.

U.S.S.G. § 2B1.1, comment. n. 3(A)(ii).°

There was sufficient evidence to find that Defendant

intended to mislead Medicare/Medicaid as to the $50,393.53

in personal expenses included on the cost report. It is

unclear what difference Defendant anticipated the inclu-

sion of his personal expenses would make in the amount

Defendant’s clinic was reimbursed for 1997, or in future

reimbursement rates. However, where a defendant seeks

to fraudulently pass off an amount of personal expenses as

legitimate patient-related expenses, as in the present case,

logic dictates that a defendant be held accountable for

* As noted above, whether it was “possible” or “impossible” for

Defendant to inflict a loss of $50,393.53 as to Count 3 is of no conse-

quence. However, there is evidence in the record that the inclusion of

Defendant’s personal expenses on the cost report, even after the

maximum reimbursement rate had been reached for the clinic, would

have resulted in an actual loss for Medicare/Medicaid by way of an .

increase in future rates of reimbursement. (See e.g. Shreve, Tr. 100, J.A.

580; Scoggins, Tr. 173, J.A. 611.)

App. 24

intending to cause the amount of loss about which he

intentionally lied. Therefore, it was not clearly erroneous

for the district court to hold Defendant accountable for an

intended loss of $50,393.53 as to Count 3.

IV. CONCLUSION

For the above reasons, the conviction and sentence of

the district court is AFFIRMED.

natn ane aed ae

Aer A Nai elt i a a

eto sae eS

App. 25

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v No. 02-6013

P.G. RAITHATHA,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Kentucky at London.

No. 00-00041 — Karl S. Forester, Chief District Judge.

Argued: January 29, 2004

Decided and Filed: May 19, 2004

Before: MERRITT and SUTTON, Circuit Judges;

FEIKENS, District Judge.*

COUNSEL

ARGUED: Glenn V. Whitaker, VORYS, SATER, SEY-

MOUR & PEASE, Cincinnati, Ohio, for Appellant. David

P. Grise, ASSISTANT UNITED STATES ATTORNEY,

Lexington, Kentucky, for Appellee. ON BRIEF: Glenn V.

Whitaker, Eric W. Richardson, VORYS, SATER, SEY-

MOUR & PEASE, Cincinnati, Ohio, for Appellant. David

P. Grise, Charles P. Wisdom, Jr., ASSISTANT UNITED

STATES ATTORNEYS, Lexington, Kentucky, for Appellee.

* The Honorable John Feikens, United States District Judge for

the Eastern District of Michigan, sitting by designation.

App. 26

OPINION

FEIKENS, District Judge.

I. INTRODUCTION

Defendant, Dr. P.G. Raithatha, was convicted by a

jury of scheming to defraud private health insurance

companies and Medicare/Medicaid, in violation of 18

U.S.C. § 1347, and of making false statements to the

Department of Labor (DOL) and to the Immigration and

Naturalization Service (INS), in violation of 18 U.S.C.

§ 1001. Defendant was sentenced to 27 months of impris-

onment. Defendant appeals his conviction and sentence.

On appeal, defendant argues: (1) the *1ry’s conviction

as to all counts should be reversed be use defendant

alleges there is insufficient evidence to susvain his convic-

tion, or alternatively, that defendant should be granted a

new trial; and (2) the district court erred in attributing

any loss figure to defendant as to Counts 1 through 20,

and that therefore the district court’s loss calculations for

sentencing purposes should be reversed.

II. FACTUAL BACKGROUND

A. Defendant’s Medical Practice

Defendant is a physician who owned and operated two

clinics in 1997, the McKee Medical Center in McKee,

Kentucky, and the Richmond Medical Center in Richmond,

Kentucky. In 1997, defendant sold the clinics to Mountain

After Hours Clinic Corporation (“MAHC”). As part of the

sale, defendant became an employee of MAHC and was

aati

App. 27

issued one-sixth of the shares of stock in MAHC. By 1998,

MAHC owned four other clinics in Hazard, Nicholson,

London, and Somerset, Kentucky.

During 1997, when defendant owned the McKee and

Richmond clinics, the billing for both clinics was done at

the McKee clinic. Tammy Spurlock, defendant’s office

manager, testified that she, Beverly Lainhart, and Renee

Hudson did billing work. Between January and December

of 1998, all billing for the six MAHC clinics was performed

by an outside billing service, Office Management Services

(“OMS”). In April of 1999, OMS stopped providing billing

services for MAHC, and the McKee clinic began doing

billing for all of the clinics.

To bill its services, a medical clinic issues an invoice te

the patient’s insurer that contains a current procedure

terminology (“CPT”) code. The CPT code indicates to the

insurer the level of service rendered by the clinic and the

amount of reimbursement owed to the clinic. When a

medical practitioner sees a patient, the practitioner

records a CPT code on an “encounter form” to record the

services performed. The CPT codes for established pa-

tients range from the least expensive, 99211, to the most

expensive, 99215. The CPT codes for new patients range

from the least expensive, 99201, to the most expensive,

99205. (Cost. Tr. 53.) One type of “up-coding” scheme

occurs where the CPT numbers are changed on the en-

counter forms and/or billing sheets sent to the insurance

companies so that it appears as if the clinic performed

more expensive services than were actually provided.

In 1998, defendant helped recruit seven foreign

physicians for MAHC. Defendant recruited them under a

program that allows foreign doctors to stay in the United

App. 28

States if they secure employment in medically under-

served areas. Under this program, MAHC had to meet

several requirements including submitting a Labor Condi-

tion Application (“LCA”) to the DOL, and a Petition for

Nonimmigrant Worker (an “I-129 form”) to the INS,

setting forth information such as the physician’s wage, for

each physician hired. MAHC was required to pay each

foreign doctor no less than the prevailing wage for the

area -- the average wage paid to physicians in the area for

comnparable work.

The McKee clinic was designated a “rural health

clinic” by Medicare. As a rural health clinic, the McKee

clinic was reimbursed a flat rate for each Medi-

care/Medicaid patient it saw, regardless of the treatment

rendered. The McKee clinic was required to submit to

Medicare a yearly “cost report” — a summation of the costs

incurred by the clinic in treating patients. Once a clinic

reached the maximum reimbursement rate set by Medi-

care/Medicaid, additional expenses on the cost report were

not reimbursed during that year. However, reported costs

were used to calculate future Medicare/Medicaid reim-

bursement rates per patient. (Shreve, Tr. 100.)

In May 1998, a cost report was prepared for the

McKee clinic for the period of October 1, 1996 through

September 30, 1997, which included $50,393.53 of defen-

dant’s personal expenses. Defendant alleges that when

defendant operated as a sole proprietor of the Richmond

and McKee clinics, prior to their purchase by MAHC,

defendant “often used business checks to pay personal

expenses and would, at the end of the year, separate the

personal and business expenses in order to prepare the

corporation’s tax returns.” (Def. Br. 113.) Defendant

App. 29

contends that his personal expenses were inadvertently

included on the cost report.

B. Prosecution of Defendant

On July 24, 2000, a twenty-count indictment was filed

against defendant. Counts 1 and 4 charged defendant with

defrauding private insurance companies in 1997 (Count 1)

and 1998 and 1999 (Count 4), in violation of 18 U.S.C.

§ 1347. Counts 1 and 4 charged defendant with instructing

billing staff to: (a) raise the CPT codes on invoices when

the physician had reported a lower level of service; (b)

submit invoices to insurance companies for services

performed by other physicians, as if defendant had per-

formed them; and (c) submit claims with a diagnosis

listing an illness, when the patient did not have an illness.

(Indictment, 2-3, 8-10.)

Counts 2 and 5 charged defendant with scheming to

defraud Medicare/Medicaid in 1997 (Count 2) and 1998

and 1999 (Count 5), in violation of 18 U.S.C. § 1347.

(Indictment, 4-6, 10-12.) Counts 2 and 5 charged defen-

dant with causing patients to present themselves for

medically-unnecessary visits by: (a) refusing to authorize

refills on prescriptions and preventing employees from

authorizing refills of prescriptions; (b) making unan-

nounced and unrequested home visits to patients; (c)

approaching people on the street and ushering them into

the clinic for unscheduled examinations; (d) examining

people who had come into the clinic for non-medical rea-

sons, such as to pay debts owed to defendant; (e) ordering

medical tests not related to patients’ conditions; (f) falsely

representing that other physician employees had special-

ties so that patients would be examined an additional time

App. 30

by a “specialist”; and (g) refusing to give test results until

an additional appointment was kept. (Indictment, 4-6, 10-

12.)

Count 3 charged defendant with defrauding Medi-

care/Medicaid, in violation of 18 U.S.C. § 1347, by submit-

ting a cost report for 1997 that included personal expenses

unrelated to patient care. Included in those expenses was

money which was actually spent to furnish and complete

defendant’s home. (Indictment, 6-7.)

Counts 6 through 13 charged defendant with submit-

ting false statements to the DOL, in violation of 18 U.S.C.

§ 1001, by submitting LCAs that misstated the salaries of

seven foreign physicians employed by MAHC. The indict-

ment charged defendant as “the person in charge of

recruiting physicians for the Corporation.” (Indictment,

12.) The indictment alleged that the “forms falsely over-

stated the salary to be paid to the physicians, in order to

disguise the fact that the physicians were being paid less

than the required amount.” (Indictment, i3.)

Counts 14 through 20 charged defendant with submit-

ting false statements to the INS, in violation of 18 U.S.C.

§ 1001, by submitting I-129 forms. that misstated the

salaries of the seven foreign physicians identified in

Counts 6 through 13. (Indictment, 15-16.)

The defendant pleaded not guilty to all counts.

Trial began on July 2, 2001, before Chief Judge Karl

S. Forester. Defendant moved for a judgment of acquittal.

The district court denied the motion. On July 19, 2001, the

jury returned a guilty verdict as to all counts (Counts 1

through 20). Defendant timely moved for a new trial. On

September 12, 2001, the district court denied the motion

App. 31

for a new trial. This appeal followed, both as to defendant’s

conviction and sentence as to all counts.

C. Presentence Investigation Report (PSR)

Loss Calculation

The probation office determined that it would be

difficult to discern an actual loss figure for Counts 1 and 4,

but that an intended loss figure could be calculated “for

the up-coding conduct which occurred in 1999.” Therefore,

the PSR calculated an intended loss figure of $206,461.43

for Counts 1 and 4, based on evidence of defendant’s up-

coding scheme. The PSR calculated an intended loss figure

of $50,393.53 for Count 3, equal to the amount of defen-

dant’s personal expenses which were included in the cost

report submitted to Medicare/Medicaid. The probation

office determined that an intended loss amount for Counts

2 and 5, related to defrauding Medicare/Medicaid could

not be quantified. Thus, the PSR recommende. hat a

total intended loss figure of $256,854.96 ($206,461.43 +

$50,393.53) should be attributed to defendant as to Counts

1 through 5.

The PSR arrived at the intended loss figure of

$206,461.43 for Counts 1 and 4 through a complex series

of ten steps. First, the probation office went through

encounter forms seized from the McKee Medical Center on

November 17, 1999, and extracted all of the encounter

forms from 1999 for patients with private insurance that

were marked with 99211, 99212, 99201, and 99202 CPT

codes. Second, the encounter forms in each CPT code

category were counted. Third, of the sixty-four private

insurance companies billed by MAHC in 1999, a sample of

App. 32

ten insurance companies were contacted to determine

their usual and customary charges for each CPT code.

Fourth, using the customary charges for each CPT

code at each of the ten selected insurance companies, the

probation office computed the payment difference that

would have resulted had each category of CPT codes been

up-coded and billed at a higher CPT code. For example,

the probation office calculated the payment difference

between 99211 to 99213 to determine the amount of loss

each of the ten insurance companies would have suffered

had encounter forms marked with a 99211 been up-coded

and billed under a 99213 CPT code. The probation office

determined the payment differences between the following

additional CPT categories for each of the ten insurance

companies: 99212 to 99213, 99201 to 99203, and 99202 to

99203.

Fifth, an average payment difference was computed

for each of the above categories of possible CPT up-codes.

For example, the probation office determined that the

average payment difference between services coded 99211

and 99213 was $28.24. (PSR, 7 50-54.) Sixth, the number

of encounter forms in each CPT category (determined in

step 2) was multiplied by the average payment difference

for each category (determined in step 5) to calculate an

intended loss figure for each category of CPT codes. For

example, for CPT code 99211, the probation office calcu-

lated an intended loss figure for 1999 of $35,221.10 by

multiplying $28.45 (the average payment difference

between 99211 and 99213) by 1,238 (the number of 99211

encounter forms for 1999 seized from the McKee Clinic).

Seventh, the intended loss figures for each CPT category

were added together to come up with a total intended loss

figure for 1999 of $112,820.45. This figure represents the

App. 33

loss which would have occurred had each claim in each

CPT category for 1999 been up-coded. (PSR, 7 55-56.)

Eighth, the probation office determined an intended

loss figure for 1998 of $56,410.23, by backtracking from

the intended loss figure calculated for 1999. The probation

office determined that defendant had “extensive control”

over the billing of three of the six clinics in the MAHC

system during 1998, when the billing for MAHC was

conducted by OMS. (PSR, 7 57.) Therefore, the probation

office calculated the intended loss figure for 1998 by

multiplying the intended loss figure for 1999 by 50%.

Ninth, the probation office determined an intended

loss figure for 1997 of $37,230.75. Since defendant oper-

ated only two clinics in 1997, the probation office calcu-

lated an intended loss for 1997 by multiplying the

intended loss figure for 1999 by 33%. (PSR, 7 58.) Finally,

the probation office added together its intended loss

calculations for 1999, 1998, and 1997 to arrive at a total

loss calculation of $206,461.53 for Counts 1 and 4. (PSR,

q 59.)

For Counts 6 through 20, the probation office calcu-

lated an actual loss figure of $216,833.94. (PSR, { 73.)

This was based on the amount of pay the foreign physi-

cians were entitled to but did not receive during their

employment with MAHC. (PSR, 473.) For Counts 6

through 20, the probation office calculated an intended loss

of $523,670.00. This figure equals the difference between

the wage reported to the United States minus the contract

amount, multiplied by the number of years of the contract,

for each foreign physician. This intended loss amount

represents the amount of money per contract that MAHC

stood to gain by illegally paying its foreign physicians below

App. 34

the prevailing wage. The probation office used the in-

tended loss calculation for Counts 6 through 20

($523,670.00), because it was greater than the calculated

actual loss, and combined it with the intended loss calcula-

tion for Counts 1 through 5 ($256,854.96) to calculate a

total intended loss figure for Counts 1 through 20 of

$780,524.96.

Based on this loss calculation, the probation office

recommended a total offense level of 20. U.S.S.G § 2F1.1

calls for a base offense level of 6 for violations of 18 U.S.C.

§ 1347 and § 1001. The PSR recommended a 10 level

increase because the intended loss totaled more than

$500,000 but less than $800,000. U.S.S.G. § 2F1.1(b)(1)(K).

The PSR recommended a 2 level increase because the

offense included more than minimal planning, and an

additional 2 level increase because the abuse of a private

trust facilitated the offense. Thus the PSR recommended a

base offense level of 6 plus a 14 level increase, for a total

offense level of 20. Based on the recommended total

offense level of 20 and defendant’s criminal history cate-

gory of I, the PSR recommended a guideline range for

imprisonment of 33 to 41 months.

D. Defendant’s Sentencing

On August 2, 2002, the district court sentenced

defendant to 27 months. The district court did not order

restitution. (Sentencing, Tr., 37.) The district court

adopted the PSR’s calculation of an intended loss of

$206,461.43 for Counts 1 and 4, and an intended loss of

$50,393.53 for Count 3, for a total intended loss of

$256,854.96 for Counts 1 through 5.

a eats 7

App. 35

With regards to Counts 6 through 20, the district

court adopted the PSR’s actual loss calculation of

$216,833.94, after determining that the intended loss

calculation relating to Counts 6 through 20 was too specu-

lative. (Sentencing, Tr. 77-80.) However, because the court

determined that the conduct charged in Counts 6 through

20 fell outside the heartland of cases that U.S.S.G. § 2F1.1

(the applicable Sentencing Guideline) was designed to

address, the court decided not to hold defendant account-

able for the actual loss caused by his alleged conduct in

Counts 6 through 20. Accordingly, the district court deter-

mined that the total loss attributable to defendant was

$256,854.96 (the intended loss calculated for Counts 1

through 5 minus the actual loss calculated for Counts 6

through 20).

Applying U.S.S.G. § 2F1.1, the district court deter-

mined that the base offense level was 6, and added 4

points as recommended in the PSR because the offense

involved more than minimal planning and the violation of

a private trust. The district court added an 8 level increase

because the amount of loss it determined was attributable

to defendant was above $200,000 and below $350,000.

U.S.S.G. § 2F1.1(b)(1)(D. Thus, the district court assessed

a total offense level of 18, for which the applicable guide-

line range was 27 to 33 months. (Sentencing Tr. 86.) The

district court sentenced defendant to 27 months of impris-

onment and two years supervised release on each count to

be served concurrently. (Sentencing Tr. 95.) Now defendant

appeals both his conviction and sentence as to all counts.

App. 36

Ill. ANALYSIS

a. SUFFICIENCY OF EVIDENCE

1. Standard of Review

When evaluating a claim of insufficient evidence, a

reviewing court must determine “whether, after viewing

the evidence in the light most favorable to the prosecution,

any rational trier of fact could have found the essential

elements of the crime beyond a reasonable doubt.” United

States v. Harris, 293 F.3d 970, 974 (6th Cir. 2002) (citing

Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in

original)). A defendant claiming insufficiency of evidence

bears a “very heavy burden.” United States v. Vannerson,

786 F.2d 221, 225 (6th Cir. 1986). “(C]ircumstantial evi-

dence alone can sustain a guilty verdict.” United States v.

Ellerbee, 73 F.3d 105, 107 n.2 (6th Cir. 1996) (citation

omitted). The evidence need not remove every possible

hypothesis except that of guilt. United States v. Williams,

195 F.3d 824, 826 (6th Cir. 1999) (citations omitted).

2. Health Care Fraud (Counts 1-5) - 18

U.S.C. § 1347

- To convict a defendant of health care fraud under 18

U.S.C. § 1347, the Government must demonstrate that the

defendant: (1) knowingly devised a scheme or artifice to

defraud a health care benefit program in connection with

the delivery of or payment for health care benefits, items,

or services; (2) executed or attempted to execute this

scheme or artifice to defraud; and (3) acted with intent to

defraud. (Jury Instruction No. 12, July 19, 2001.) The

defendant must have intended, through some deception,

“to induce another to part with property or to surrender

some legal right.” United States v. Frost, 125 F.3d 346, 354

App. 37

(6th Cir. 1997) (cited in United States v. DeSantis, 134 F.3d

760, 764 (6th Cir. 1998)).

Defendant argues there is insufficient evidence to

sustain his conviction for Counts 1 and 4, defrauding or

attempting to defraud private health insurance compa-

nies. However, many staff members testified that defen-

dant instructed them to bill visits covered by private

insurance under CPT codes 99213 or 99203, regardless of

the CPT code entered by the attending physician on the

encounter form. The staff members were aware that this

“up-coding” scheme resulted in higher reimbursement

from private insurance companies. (Justice, Tr. 164.) After

the FBI searched the McKee clinic and defendant’s home

and seized encounter forms, insurance information, and

records, staff members testified that the up-coding ceased.

(Howard, Tr. 76-77.)

In addition, staff members testified that defendant

routinely ordered tests unrelated to his patients’ condi-

tions and supported the tests with false diagnoses.

(Meadors, Tr. 5-10.) Zeren, a nurse practitioner working at

the McKee clinic, testified that after she performed sports

physicals on children at local schools and found no indica-

tion of upper-respiratory infections, defendant, who had

not been present at the examinations, falsely diagnosed

them as having upper respiratory infections. (Zeren, Tr.

45-51.) Taking this evidence in the light most favorable to

the prosecution, a reasonable juror could have found

defendant guilty of defrauding or attempting to defraud

private insurance companies, as charged in Counts 1 and

4.

Defendant argues there is insufficient evidence to

sustain his conviction for Counts 2 and 5, defrauding

App. 38

Medicare/Medicaid by causing patients to come into

defendant’s clinics for medically unnecessary examina-

tions or treatments. However, physicians working for

defendant testified that defendant told them to bring

Medicaid patients back for additional office visits, instead

of giving them a prescription with refills, so that Medicaid

could be billed for additional visits. (Patel, Tr. 25-26.) Staff

members testified that when business was slow, defendant

solicited patients from the street and billed them as office

visits. (Justice, Tr. 183.) Staff members testified that

people would come into the office for purposes unrelated to

receiving medical care, such as paying debts to defendant,

and “before they left, they were a patient,” and billed as a

patient. (Amon, Tr. 114.) Taking this evidence in the light

most favorable to the prosecution, a reasonable juror could

have found defendant guilty of defrauding or attempting

to defraud Medicare/Medicaid, as charged in Counts 2 and

5.

Defendant also argues there is insufficient evidence to

sustain his conviction for Count 3, defrauding Medi-

care/Medicaid by including personal expenses in a cost

report submitted to Medicare/Medicaid for the McKee

Clinic in 1997. The cost report included expenses for

defendant’s personal residence totaling $50,393.53.

Though defendant did not sign the report, he was given an

opportunity to review it before it was submitted. (Lynn, Tr.

131-132.) When defendant purchased a TV and stereo

system for his residence he instructed the salesman to

issue the invoice to the McKee Clinic, as if the items had

been purchased by the clinic and not for defendant’s

personal use. (Miller, Tr. 203; Ware, Tr. 198.) Taking this

evidence in the light most favorable to the prosecution, a

reasonable juror could have found that defendant intended

App. 39

to defraud Medicare/Medicaid by including personal

expenses on the cost report submitted to Medicare/

Medicaid.

3. Making False Statements (Counts 6-20)

- 18 U.S.C. § 1001

In order to establish a violation of 18 U.S.C. § 1001,

the Government must demonstrate that: (1) the defendant

made a statement; (2) the statement is false or fraudulent;

(3) the statement is material; (4) the defendant made the

statement knowingly and willfully; and (5) the statement

pertained to an activity within the jurisdiction of a federal

agency. United States v. Logan, 250 F.3d 350, 361 (6th Cir.

2001) (citations omitted). A statement is “material” if it

“has the natural tendency to influence, or is capable of

influencing, the federal agency.” Id. at 361 (citations

omitted).

Defendant argues there is insufficient evidence to

sustain his conviction for making false statements or

causing false statements to be made to the DOL and the

INS, regarding the salaries of seven foreign physicians

employed by MAHC. For each foreign physician hired,

MAHC was required to file an LCA with the DOL and an

I-129 form with the INS stating the employee’s prevailing

wage salary. The evidence demonstrated that the submit-

ted LCAs and I-129 forms overstated the salary MAHC

actually paid the foreign physicians. Defendant’s payroll

manager testified that she signed the LCAs and I-129

forms at defendant’s direction. (Bowling, Tr. 13.)

In addition, several foreign physicians testified to

defendant’s role in making contracts with the physicians,

after the forms had been submitted to the DOL and the

App. 40

INS, that reduced the physician’s salary from that stated

on the submitted forms. (Dani, Tr. 37-39.) One physician

testified that defendant threatened her with visa problems

when she questioned having to sign an amendment to her

original contract (for $110,000/year) which reduced her

salary to $70,000/year. (Ravisankar, Tr. 6-9.) Taking this

evidence in the light most favorable to the prosecution, a

reasonable juror could have found that defendant was

guilty of intentionally causing false statements to be made

to the DOL and INS.

Defendant argues that his conviction on Counts 7 and

15, charging defendant with causing false statements to be

made to the DOL and INS about one of the foreign physi-

cians, Dr. Patel, should be reversed. Defendant contends

that the forms submitted by the government are forms

which were actually prepared and submitted for Dr. Divya

Joshi, and not for Patel. With regard to defendant’s con-

tention as to Counts 7 and 15, the record is abundantly

clear that such false statements were made. Defendant’s

contention that certain forms referring to another physi-

cian were submitted mistakenly for Patel is therefore

harmless error.

B. AMOUNT OF LOSS ATTRIBUTED TO DE-

FENDANT FOR SENTENCING

1. Standard of Review

A court of appeals reviews de novo a sentencing court’s

interpretation of the Sentencing Guidelines, but must

uphold a sentencing court’s factual findings unless “clearly

erroneous.” United States v. Ware, 282 F.3d 902, 907 (6th

Cir. 2002). A factual finding is “clearly erroneous” when

“the reviewing court on the entire evidence is left with the

App. 41

definite and firm conviction that a mistake has been

committed.” Jd. (citing United States v. U.S. Gypsum Co.,

333 U.S. 364, 395 (1948)).

A sentencing court “need not determine the amount of

loss with precision.” United States v. Kohlbach, 38 F.3d

832, 835 (6th Cir. 1994) (citations omitted). A sentencing

court “need only make a reasonable estimate, given the

available information.” United States v. Guthrie, 144 F.3d

1006, 1011 (6th Cir. 1998). A defendant who challenges

such a computation must carry the burden of demonstrat-

ing “that the court’s evaluation of the loss was not only

inexact but outside the universe of acceptable computa-

tions.” United States v. Tardiff, 969 F.2d 1283, 1288 (ist

Cir. 1992) (cited in Kohlbach, 38 F.3d at 841).

For sentencing purposes, a defendant will be held

accountable for the actual or intended loss to a victim,

whichever is greater, or a combination thereof. United

States v. Wade, 266 F.3d 574, 586 (6th Cir. 2001). See also

U.S.S.G. § 2F1.1, comment. n.7. “[S]o long as the intended

loss is supported by a preponderance of the evidence, the

district court may use it in reaching the appropriate

offense level.” United States v. Logan, 250 F.3d 350, 371

(6th Cir. 2001). In 2001, amendments to the Sentencing

Guidelines clarified that “intended loss” means “the

pecuniary harm that was intended to result from the

offense” and “includes intended pecuniary harm that

would have been impossible or unlikely to occur.” § 2B1.1,

comment. n. 3(A)(ii) (emphasis added).”

* The 2001 amendments consolidated the Guidelines for Theft,

§ 2B1.1, Property Destruction, § 2B1.3 and Fraud, § 2F1.1, into one

guideline, §2B1.1 (Theft, Property Destruction, and Fraud). The

(Continued on following page)

App. 42

2. Loss Calculation

In this case, the only amounts of loss attributed to

defendant, and thus at issue on appeal, are $206,461.43

for Counts 1 and 4 and $50,393.53 for Count 3. Defendant

argues the loss calculation for Counts 1 and 4 adopted by

the district court is based on speculation. Defendant

argues that there is no evidence that he ordered “ali”

encounter forms to be up-coded, that all of the encounter

forms in the Government’s sample were not up-coded, and

that there was never an order to up-code new patient

forms or to up-code defendant’s encounter forms and that

therefore neither of these should have been included in the

loss calculation. Defendant argues the intended loss

calculation as to Count 3 is clearly erroneous because it

was allegedly impossible for him to inflict the amount of

loss for which the district court held him accountable.

Unlike the contentions of defendant as to evidence

regarding his conviction, his contentions regarding Counts

1, 4, and 3 relate only to sentencing procedures. Defendant

was found guilty of the charges in these counts and our

inquiry goes only to the amount of loss for which defen-

dant may be held accountable.

As to the loss calculation regarding Counts 1 and 4,

defendant contends there was nc evidence that any order

was given to up-code new patient CPT codes (the “9920-”

series). The record shows otherwise:

revised § 2B1.1 guideline, though not applicable at the time of defen-

dant’s sentencing, clarified the meaning of “intended loss” referred to in

§ 2F 1.1 and thus should be taken into consideration by this Court.

App. 43

Q. “Okay. Now, did he also give you orders to up-code

a 99201 code to a higher-paying code?”

A. “We was [sic] told to up-code any office visit like

that.”

Q. “Okay. All Right. So he told you to code a 99201

up to the highest level that you could do, 99203?”

A. "Tea."

(Lainhart, Tr. 40-41.) Defendant suggests that his encoun-

ter forms were erroneously included in the loss calcula-

tion. However, the Government stated unequivocally at

defendant’s sentencing hearing that “Dr. Raithatha’s forms

were not counted in the encounter forms for the 1999

figures that were given to the probation office.” (Grise,

Sentencing, Tr. 74.)

In addition, the selection of the ten most frequently

billed insurance companies to provide figures upon which

to compute average pay differences between CPT code

categories was reasonable. Furthermore, defendant’s

argument that all of the encounter forms in the Govern-

ment’s sample were not up-coded goes to actual loss, and

therefore does not disturb the district court’s calculation of

intended loss. Finally, the use of the 1999 intended loss

amount to calculate the lesser intended loss amounts for

1998 and 1997 was reasonable. Therefore, it was not

clearly erroneous for the district court to hold defendant

accountable for an intended loss of $206,461.43 as to 1 and

4. Defendant has failed to demonstrate that the loss

calculation as to Counts 1 and 4 was “outside the universe

of acceptable computations.” Kohlbach, 38 F.3d at 841.

With regards to Count 3, defendant argues that no

loss should be attributed to him because he contends that

es

App. 44 |

it was impossible for him to have caused Medi-

care/Medicaid any loss by including the $50,393.53 in

personal expenses on the cost report because his clinic had

already reached its maximum reimbursement rate. (Appel-

lant, Br. 62.) However, loss can be attributed to a defen-

dant based on a finding of actual loss or intended loss, and

a finding of intended loss is not limited to those losses

possible to inflict, or those gains possible for a defendant

to achieve. U.S.S.G. § 2B1.1, comment. n. 3(A)(ii).

There was sufficient evidence to find that defendant

intended to mislead Medicare/Medicaid as to the

$50,393.53 in personal expenses included on the cost

report. It is unclear what difference defendant anticipated

the inclusion of his personal expenses would make in the

amount defendant’s clinic was reimbursed for 1997, or in

future reimbursement rates. However, where a defendant

seeks to fraudulently pass off an amount of personal

expenses as legitimate patient-related expenses, as in the

present case, logic dictates that a defendant be held

accountable for intending to cause the amount of loss

about which he intentionally lied. Therefore, it was not

clearly erroneous for the district court to hold defendant

accountable for an intended loss of $50,393.53 as to Count

3.

IV. CONCLUSION

For the above reasons, the conviction and sentence of

the district court is AFFIRMED.

App. 45

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

LONDON

CRIMINAL ACTION NO. 00-41-1 —- KSF

UNITED STATES OF AMERICA PLAINTIFF

VS. — ORDER -

P. G. RAITHATHA DEFENDANT

(Filed Aug. 2, 2002)

* * *

On August 2, 2002, came the plaintiff, the United

States of America, by David Grise and Patrick Molloy,

Assistant United States Attorneys, and the defendant, P.

G. Raithatha, in person and by his attorneys, Glenn V.

Whitaker and Eric W. Richardson.

A hearing was held on the objections to the presen-

tence report, the motion of the defendant for downward

departure in sentencing, the motion of the defendant for

release pending appeal, and the motion of the defendant to

substitute property bond for cash bond. These proceedings

were recorded by Cindy A. Hutchinson, Official Court

Reporter.

The Court having heard counsel for the respective

parties and being sufficiently advised,

IT IS ORDERED,

(1) That the United States’ objection to Paragraph

88 of the presentence report, lack of a four-level enhance-

ment for aggravating role under U.S.S.G. 3B1.1(a), is

OVERRULED.

App. 46

(2) That the United States’ objection to paragraph 82

of the presentence report, lack of a two-level enhancement

for obstruction of justice under U.S.S.G. 3C1.1, is OVER:

RULED.

(3) That the defendant’s response filed in the record

should be sufficient to resolve the defendant’s objection to

factual statements on pages 1 through 12 of the presen-

tence report.

(4) That the defendant’s objection to an enhance-

ment for more than minimal planning under U.S.S.G.

2F1.1(b)(2) is OVERRULED.

(5) That the defendant’s objection to a two-level

enhancement for abuse of trust under 3B1.3 is OVER-

RULED.

(6) That in relation to the defendant’s objection that

the presentence report overstates the current financial

condition, net worth, and assets of the defendant, the

Court will consider the separate assets of the defendant’s

wife and children, as modified in Paragraphs 123 and 124

of the presentence report.

(7) That the Court does not have sufficient informa-

tion to make an appropriate finding regarding restitution.

Therefore, finding of restitution would unduly complicate

the sentencing process and the Court will not order resti-

tution. The United ‘States’ objections and the defendant’s

objections to restitution are OVERRULED AS MOOT.

(8) That the United States’ objections to Paragraphs

57 through 59 of the presentence report are WITH-

DRAWN.

App. 47

(9) That the Court finds that the amount of intended

loss relating to Counts 1 and 4 as calculated by the proba-

tion office is reasonable and is calculated at $206,461.43.

(10) That the Court finds that the amount of in-

tended loss relating to Count 3 as calculated by the proba-

tion office is appropriate and is calculated at $50,393.53.

(11) That the Court finds that the amount of loss for

Counts 1 through 5 subtotals $256,854.96.

(12) That the Court finds that the actual loss

amount as to Counts 6 through 20 should be calculated the

same as for Mountain After Hours Clinic at a total of

$216,829.74.

(13) That the Court finds that the total amount of

loss is $473,684.70.

(14) That the Motion of the defendant for downward

departure pursuant to U.S.S.G. 5K2.0 that the circum-

stances surrounding his offense differ in both kind and

degree from the heartland of cases Section 2F1.1 was

designed to cover is GRANTED. The Court finds that a

downward departure as to Counts 6 through 20 is war-

ranted in this case.

(15) That the Motion of the defendant for release

pending appeal is GRANTED.

(16) That the Motion of the defendant to substitute

property bond for cash bond is GRANTED. The defendant

shall post said property bond within ten (10) days of this

date. :

App. 48

This the 2nd day of August, 2002.

/s/ Karl S. Forester

KARL S. FORESTER, CHIEF JUDGE

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