PER CURIAM.
Defendants appeal their convictions for conspiracy to commit health care fraud and several substantive counts of health care fraud. Defendants primarily challenge the sufficiency of the evidence, the court's deliberate ignorance jury instruction, a number of evidentiary rulings, and the enhancements applied to their sentences. We AFFIRM.
Defendants Dennis Barson, Jr. and Dario Juarez were charged with one count of conspiracy to commit health care fraud under 18 U.S.C. § 1349 (Count 1) and nineteen counts of health care fraud under 18 U.S.C. § 1347 (Counts 2 through 20). After a jury trial, both Defendants were convicted on all 20 counts. The district court sentenced Barson and Juarez to 120 and 130 months of imprisonment, respectively, followed by three years of supervised release. The court also ordered forfeiture and restitution.
Defendant-Appellant Barson was recruited by Edgar Shakbazyan to serve as the medical director for a diagnostic clinic under Shakbazyan's control in Houston, Texas. Shakbazyan was the manager of the clinic and handled the financial affairs of the clinic. He was indicted in a multi-count indictment in this case and was convicted pursuant to his plea of guilty.
At Shakbazyan's request, Barson signed a blank form so the clinic could apply for and obtain a Medicare number to be used to bill Medicare for its services. Barson opened a bank account in his name where Medicare reimbursements could be deposited. Barson also signed a number of blank checks and gave them to Shakbazyan so he could draw on the account.
The clinic opened on June 8, 2009. For $7,000 per month, Barson traveled from Austin to Houston every other Saturday to review patient files. The clinic was set up to perform EKGs, ultrasounds, electrocardiograms, spirometer tests, and physical exams performed by a physician's assistant. Medicare was billed for 9,339 procedures for tests performed on 429 beneficiaries using Barson's Medicare number. Hundreds of the claims were for rectal sensation testing and electromyography studies of the anal or urethral sphincter, which the clinic could not and did not perform. At trial, several of the clinic's patients testified they went to the clinic because they were paid to do so and some never received any medical services. Barson testified he never reviewed bank statements, Medicare remittances, or concern himself with any of the financial affairs of the clinic.
Defendant-Appellant Juarez worked at the clinic and claimed to be a physician's assistant working under Barson's supervision. Juarez, who had no formal medical training, held himself out to patients as a physician and was the medical staff member at the clinic.
Barson closed the clinic on July 30, 2009, after he suspected that the clinic was not above board; however he notified no one of his suspicions.
Several suspicious circumstances came to Barson's attention. In the weeks leading up to closing the clinic, Barson made a number of unsuccessful attempts to reach the California doctor who reviewed ultrasounds for the clinic. Barson also learned in July that Shakbazyan was lying about his true identity. On August 4, a Medicare contractor in charge of waste, fraud, and abuse, opened an investigation into the clinic and tried unsuccessfully to contact Barson by phone. On August 11, Barson closed the clinic bank account set up to receive Medicare reimbursements. Upon receiving his 1099 tax form in February 2010, Barson learned that the clinic's bank account in his name received approximately $1.2 million in Medicare reimbursements. In his testimony, he claimed this was his first notice that this large sum had been deposited in his account during the approximately two months the clinic had been open.
Sufficiency of the evidence challenges are reviewed de novo.
Defendants' primary challenge on appeal is to the sufficiency of the evidence to establish both the conspiracy count and the substantive counts for health care fraud.
To establish a conspiracy to commit health care fraud, the government must show "the existence of an agreement between two or more people to pursue the offense of fraud; the defendant knew of the agreement; and the defendant voluntarily participated in the conspiracy."
At trial, both Barson and Juarez argued they had no knowledge of the fraudulent activity, let alone an agreement to commit fraud.
Barson based his argument that he had no knowledge of fraudulent activity on his lack of experience. Before taking the job as the medical director for the clinic, Barson was a physician in the Navy and worked a short time in private practice. When he was hired by Shakbazyan to work for the clinic, Barson was working as a neurology resident in Austin, Texas. On a resident's salary, he argued, he needed the extra money the job at the clinic would provide. Barson had no prior experience with Medicare or medical billing practices in any of his prior positions. Barson argued that he had no way of knowing about the fraudulent scheme because he never saw any patient files that included many of the tests the clinic billed Medicare for. Barson testified that the patient files he reviewed included services that the clinic was set up to provide: EKGs, ultrasounds, electrocardiograms, spirometer tests, and physical exams performed by a physician's assistant. Because he was hired in this limited role to review patient files set aside for him twice a month, Barson maintained that he had no way of knowing that the clinic was engaged in fraudulently billing Medicare.
Similarly, Juarez argued that even though he was impersonating a physician's assistant, he had no knowledge of or access to any of the facility's billing systems.
The government presented ample circumstantial evidence to establish both Defendants' knowledge of the ongoing health care fraud. Barson signed documents in blank allowing the clinic to bill under his Medicare identification number and opened a bank account in his name to receive Medicare reimbursements. He signed a number of blank checks to permit Shakbazyan to draw on the account. He allowed the bank statements to be sent to the clinic and never reviewed them. Barson received a significant sum, $7,000 per month, for reviewing patients' charts every other Saturday. Barson admitted to an FBI investigator that despite his suspicions and bad feelings about the clinic, he reported his suspicions to no one. He quietly closed the clinic on July 30. Barson did not monitor the bank account in his name or review any Medicare remittances that went to the clinic. Upon receiving his 1099 tax form showing that the clinic bank account received nearly $1.2 million, Barson again failed to contact Medicare to report his concerns.
The government also established that Juarez was aware he was participating in a scheme to commit Medicare fraud. Juarez held himself out as a "doctor" at the clinic and falsely claimed to Barson that he was a physician's assistant, the clinic's on-site medical staff member. Juarez saw almost all of the patients and turned a blind eye to the fact that most of the so-called patients had no need for medical care and that many received no medical care. He saw large numbers of patients lining up outside the clinic daily after being delivered to the clinic by the same white van. Juarez had access to the clinic's mail including the bank statements and Medicare remittances. Juarez was paid $20,000 for his work, a large sum for an unlicensed individual to pose as a physician's assistant. He lied to investigators about the payments he received. Juarez also gave conflicting testimony to an FBI investigator about an alleged break in at the clinic and missing patient files.
Barson also argues that the evidence was insufficient to establish an "agreement" to commit health care fraud. His arguments closely track his arguments on the knowledge element and fails for similar reasons.
The evidence established that Barson and Shakbazyan agreed that (1) Barson would apply for a Medicare number; (2) Barson would allow the clinic to use that number to bill Medicare; and (3) Barson would receive $7,000 per month for reviewing files every other Saturday. The evidence established that Shakbazyan set up the fraudulent scheme and had intimate knowledge of the details of the fraud.
Juarez agreed with Skakbazyan to work at the clinic as the medical staff member and hold himself out as a physician's assistant to Barson and as a physician to the patients.
The jury was also entitled to find that the Defendants committed health care fraud on the substantive counts of the indictment. Each substantive count was based on a separate request for Medicare reimbursements that the government established were not for medical services needed or provided. 18 U.S.C. § 1347 sets forth the elements of the offense:
Pinkerton doctrine, which imposes criminal liability on all conspirators for the acts of other co-conspirators when those acts are foreseeable.
Defendants argue next that the district court erred in giving the deliberate ignorance instruction.
Next, Defendants argue that the district court abused its discretion by rejecting their proposed instruction on the object of the conspiracy. Defendants complain that the district court did not instruct the jury that the government was required to prove the object of the conspiracy in the exact language of the indictment. The court instructed the jury that the object of the conspiracy was "health care fraud, in violation of Title 18, United States Code, Section 1347." At Barson's request, the court also charged:
The Defendants contend the court erred in failing to instruct the jury that the government was required to prove these facts. We find no abuse of discretion in the district court's instruction. The district court instructed the jury on the object of the conspiracy that tracks the Fifth Circuit pattern jury instructions, which we have approved.
Defendants raise a number of evidentiary objections in brief including: whether the district court erred in admitting the testimony of the executive director of the Texas Medical Board; whether the cross-examination of the FBI Case Agent was appropriately limited to the Agent's direct examination testimony; whether the exclusion of the plea colloquy of Shakbazyan was proper; and whether the exclusion of evidence gathered by a police officer in California from an unindicted co-conspirator was proper. We have reviewed Defendants' arguments and find no abuse of discretion in the evidentiary rulings by the district court.
Barson disputes two enhancements applied to his sentence. Juarez joins Barson in objecting to the first enhancement.
First, Defendants argue that the district court erred in concluding the 429 patients or Medicare beneficiaries for whom the conspirators falsely claimed benefits were "victims" under the guidelines.
Second, Barson argues that the application of a sentencing enhancement for obstruction of justice under U.S.S.G. § 3C1.1
Defendants allege that several statements made by prosecutors during trial amounted to prosecutorial misconduct. Some statements were objected to during trial and some objections are raised on appeal. We have reviewed these arguments and statements and find no error by the district court in permitting these arguments.
The district court committed no reversible error and we therefore affirm the Defendants' convictions and sentences.
JONES, Circuit Judge, concurring in part and dissenting in part:
Although I am pleased to concur in the bulk of this Medicare fraud appeal, I differ with the panel majority's interpretation of the term "victim" for sentencing enhancement purposes. The majority has embraced an unprecedented and grammatically inexplicable use of the term to, in effect, double count the loss attributable to this unsavory fraudulent patient care operation. The government has commendably stepped up its prosecution of flagrant Medicare and Medicaid frauds, but never have I seen this double counting of the "loss" to include not only the United States taxpayers who support Medicare payments but also the "patients," who paid not a dime, may not have even received treatment, and in a number of cases were co-conspirators paid to lend their names to the treatment center's fictitious files. Defendants have a right to be sentenced according to the plain meaning of the guidelines, not the government's here-concocted abuse of terms. I respectfully dissent.
The defendants here received a six-level sentencing enhancement upon the district court's finding that the 429 Medicare beneficiaries who visited defendants' fraudulent clinic were "victims" under the United States Sentencing Guidelines. (There was already an enhancement for the loss to the United States Treasury.) The majority's opinion tersely affirms the enhancement.
By way of background, "Victim" is not defined in the loss section of the Guidelines, § 2B1.1, but Note 1 (here inapplicable) and Note 4 of the Commentary define the term. Note 4(E) provides in relevant part:
The government argues that since the use of the 429 alleged beneficiaries' Medicare identification information was part of an unlawful conspiracy, the enhancement was proper. The defendants contend, however, that the beneficiaries were participants in the Clinic's kickback scheme rather than victims, and that the 2009 iteration of the Sentencing Guidelines was not intended to treat these beneficiaries as victims.
Guidelines Commentary "that interprets or explains a guideline is authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline." Stinson v. United States, 508 U.S. 36, 38, 113 S.Ct. 1913, 1915 (1993). "Application notes are given controlling weight so long as they are not plainly erroneous or inconsistent with the guidelines." United States v. Rodriguez-Parra, 581 F.3d 227, 229 n.3 (5th Cir. 2009) (citing United States v. Urias-Escobar, 281 F.3d 165, 167 (5th Cir. 2002).
In my view, the government's reading of the Guidelines is plainly erroneous for two reasons. First, that interpretation is inconsistent with the plain meaning of the term "victim." A victim is a "person who suffers from a destructive or injurious action or agency." "Victim," The Random House Dictionary of the English Language (1966). See also "Victim," Merriam-Webster's Dictionary of the English Language, http://www.merriam-webster.com/dictionary/victim, accessed Oct. 26, 2016 ("a person who has been attacked, injured, robbed, or killed by someone else"). The government, which bore the burden of proof for sentencing purposes, did not establish that any of the 429 purported patients were victims in this definitional sense. On the contrary, as the majority opinion states, "At trial, several of the clinic's patients testified they went to the clinic because they were paid to do so and some never received any medical services." Consequently, at least some of the 429 alleged beneficiaries could have been considered co-conspirators. Applying the application of the term "victims" here verges on the Orwellian.
Second, the majority's interpretation is inconsistent with the purpose of the Guideline's definition of victims. The Guidelines were updated as part of Amendment 726 to the Identity Theft Enforcement and Restitution Act of 2008.
This purpose is not fulfilled by applying the definition of victims in this case. The government has not established that the 429 Medicare claimants had to spend "significant time," or any time at all, resolving credit or related
I respectfully dissent from this portion of the majority opinion.
U.S.S.G. § 3C1.1.