Ripple, Circuit Judge.
A grand jury indicted Rick E. Brown and Mary C. Talaga with one count of conspiracy to commit health-care fraud, in violation of 18 U.S.C. § 1349, six counts of health-care fraud, in violation of 18 U.S.C. § 1347, and three counts of falsifying a matter or providing false statements, in violation of 18 U.S.C. § 1035(a). A jury convicted them on all counts. The district court sentenced Mr. Brown to eighty-seven months' imprisonment on the health-care fraud counts and terms of sixty
Both defendants now maintain that the district court erred in imposing their respective sentences. Mr. Brown maintains that the district court's assumptions about the need for general deterrence were unfounded and constituted procedural error. Ms. Talaga argues that, when the district court calculated the amount of loss for which she was responsible, it impermissibly included losses that occurred before she joined the conspiracy. The inclusion of these amounts resulted in a higher loss amount, corresponding to a higher offense level and sentence.
Because the district court did not err in its reasoning or in its sentencing determination, we affirm its judgments.
Medicall Physicians Group, Ltd. ("Medicall"), a company that provided home physician visits to patients, employed both Mr. Brown and Ms. Talaga. Mr. Brown served as Medicall's office manager, and Ms. Talaga had responsibility for medical billing. Dr. Roger Lucero, a third defendant, was the owner and medical director of the company. He pleaded guilty to the conspiracy count, cooperated with the Government, and testified against both Mr. Brown and Ms. Talaga.
Beginning at least as early as January 2007, Mr. Brown and Dr. Lucero began submitting false and fraudulent claims to Medicare. Ms. Talaga, who had been trained as a medical biller, joined Medicall in August 2007. She reported to Mr. Brown and was paid a percentage of Medicall's earnings.
According to the evidence, the fraud at Medicall took at least three forms. First, Mr. Brown and Ms. Talaga billed Medicare for "prolonged" visits, using the prolonged care code, as a way to pay for employees' travel time. Second, regardless whether the patient qualified for, or received, the billed-for care, every patient was billed for "Care Plan Oversight," a type of physician supervision for patients requiring complex or multi-disciplinary care. Finally, Mr. Brown and Ms. Talaga billed Medicare for services purportedly provided to deceased patients, as well as services by providers who no longer were associated with Medicall.
After hearing the evidence, the jury convicted both defendants on all counts of the indictment.
The probation office prepared a presentence report ("PSR") for Mr. Brown. The PSR calculated a base offense level of six under U.S.S.G. § 2B1.1(a)(2), and then applied an eighteen-level increase under § 2B1.1(b)(1)(J) for an intended loss of approximately $4.3 million. The PSR also applied (1) a two-level increase for a federal health-care offense involving a loss of more than $1 million but less than $7 million; (2) a two-level increase for use of sophisticated means; (3) a four-level increase for being a leader or organizer; and (4) a two-level increase for obstruction of justice because Mr. Brown had testified falsely at trial about his role in the offense. These increases yielded a total offense level of thirty-four that, when combined with Mr. Brown's criminal history category of I,
Mr. Brown objected to various aspects of the PSR's calculation. The district court agreed with Mr. Brown that the fraud did not involve sophisticated means. It also gave Mr. Brown the benefit of the loss table in the new Guidelines, which yielded a sixteen-level increase, as opposed to an eighteen-level increase, for amount of loss. When combined with Mr. Brown's criminal history category, the new calculation yielded a guidelines range of 121 to 151 months.
The district court then considered "the 3553(a) factors one by one."
Finally, the court noted that, with respect to specific deterrence, it was "highly unlikely" that Mr. Brown would commit a crime in the future.
The court reiterated many of these considerations in its oral statement of reasons:
The probation office also prepared a PSR for Ms. Talaga. It set her base offense level at six pursuant to § 2B1.1, and applied an eighteen-level increase for the amount of loss (greater than $2.5 million, but less than $7 million). It also included a two-level increase for use of sophisticated means and a two-level increase for a federal health-care offense. These determinations yielded an offense level of twenty-eight that, when combined with a criminal history category of I, yielded a guidelines range of seventy-eight to ninety-seven months.
Ms. Talaga objected to various aspects of the PSR. Her primary argument was that the intended loss amount should be reduced. She submitted that her "intended loss could not have been more than the amount that Medicare actually paid because Ms. Talaga knew that Medicall ... would not have obtained the full $4M + that Medicall ... fraudulently billed."
Consequently, she claimed, she had rebutted the Government's prima facie case.
Ms. Talaga also argued that the amount of loss should be decreased because she did not recognize that she was committing fraud when she first began at Medicall.
The court accepted that, as an experienced biller, she would be familiar with Medicare's reimbursement levels. Therefore, concluded the court, Ms. Talaga should not be responsible for the amount of all the false claims, but only those that fell within the reimbursement schedule set by Medicare. Thus Ms. Talaga's amount of loss was reduced to $3.262 million.
The court rejected Ms. Talaga's argument that she should not be responsible for fraudulent billings from the beginning of her tenure.
Giving Ms. Talaga the benefit of the upcoming amended schedule, the court calculated a new guidelines range of fifty-one to sixty-three months. After considering the § 3553(a) factors, the court imposed a sentence of forty-five months' imprisonment.
Both Mr. Brown and Ms. Talaga timely appealed their sentences.
Both Mr. Brown and Ms. Talaga maintain that the district court committed procedural error when imposing their sentences. "Whether a district court followed proper sentencing procedure is a question of law that we review de novo." United States v. Olmeda-Garcia, 613 F.3d 721, 723 (7th Cir. 2010).
United States v. Lockwood, 840 F.3d 896, 900 (7th Cir. 2016) (quoting Gall v. United States, 552 U.S. 38, 53, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007)). We consider first Mr. Brown's claim of error and then turn to Ms. Talaga's.
With respect to Mr. Brown, the district court properly calculated the
Mr. Brown maintains, however, that the district court committed procedural error because it relied on "unfounded" assumptions in articulating a need for general deterrence.
We previously have endorsed the idea that white-collar criminals "act rationally, calculating and comparing the risks and the rewards before deciding whether to engage in criminal activity." United States v. Warner, 792 F.3d 847, 860-61 (7th Cir. 2015). They are, therefore, "prime candidates for general deterrence." Id. at 860 (quoting United States v. Peppel, 707 F.3d 627, 637 (6th Cir. 2013)). Our approach comports with that of our sister circuits. See United States v. Musgrave, 761 F.3d 602, 609 (6th Cir. 2014) ("Because economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity, these crimes are prime candidates for general deterrence." (quoting Peppel, 707 F.3d at 637)); United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006) (using language identical to that in Musgrave); cf. United States v. Goffer, 721 F.3d 113, 132 (2d Cir. 2013) (noting that "high sentences" were necessary to alter the calculus "that insider trading `was a game worth playing'"). The district court, therefore, did not err in relying on such a widely accepted principle.
The district court was entitled to conclude that, given that health-care fraud is widespread and that therefore there is a lower likelihood of getting caught, a serious penalty was necessary to ensure deterrence. At sentencing, the Government specifically brought to the district court's attention that "the Medicare program has imposed a moratorium on additional companies joining the program to provide home healthcare services because it is — the fraud in the area is so prevalent."
Mr. Brown also submits, however, that "[s]ome press re-leases and news articles leading up to Brown's September 2015 sentencing hearing include rather dramatic statistics about the success of intensified law enforcement efforts in the area of Medicare fraud."
Moreover, even if this material had been presented to the district court, it would not have required the court to alter its conclusion that those who engage in Medicare fraud have a "low likelihood of getting caught."
Mr. Brown maintains, however, that his case is indistinguishable from United States v. England, 555 F.3d 616 (7th Cir. 2009), and other cases in which we have found error because the district court based the sentence on unfounded assumptions. In England, the defendant, while incarcerated, threatened witnesses over the telephone and later was convicted of threatening force against a witness, his brother-in-law. At sentencing, the court articulated the belief that, had the defendant been out on bond, he would have armed himself and used "what degree of force ... was necessary to get them to drop the charges against him." Id. at 620-21 (internal quotation marks omitted). The district court, therefore, determined that the appropriate guideline was § 2A2.1, "Assault with Intent to Commit Murder; Attempted Murder," and that the nature of the offense warranted a sentence within the attempted-murder guideline range. Id. at 618-19. On appeal, we evaluated whether the district court's findings "were sufficiently `based on reliable evidence' to satisfy due process, or if they amount[ed] to speculation, albeit informed, that f[ell] short of satisfying due process requirements." Id. at 622 (quoting United States v. Santiago, 495 F.3d 820, 824 (7th Cir. 2007)). We explained that
Id. In England, we were "unable to conclude that a preponderance of the evidence buttresse[d] the court's belief that England would have" committed the crime of attempted murder because all of the defendant's family, including the threatened witness, "testified that they did not feel threatened by England's statements" but "that England was merely `blowing off steam' in issuing threats." Id. at 623. "[B]ecause the evidence appear[ed] at least in equipoise," the preponderance of the evidence standard was not met. Id.
Mr. Brown's situation stands in stark contrast to the defendant in England. In England, the district court drew conclusions about England's individual conduct, which were not supported by a preponderance of the evidence, to determine England's presumptive guideline range and then sentenced England within that range. Here, however, the factual foundations for the district court's guideline calculation are sound. Moreover, the district court's statements regarding white-collar crime and the prevalence of Medicare fraud are not unfounded assumptions but are grounded in case law, in the record, and in common sense.
For these reasons, counsel urged, "even a modest prison term for Mr. Brown could send that adequate message to society that law enforcement can and will investigate you for Medicare fraud."
There is no question that, from a procedural perspective, the district court addressed and rejected this argument. In its statement of reasons, the court stated that it "agree[d] with [Government counsel] that people in the healthcare field ... engage in a cost/benefit analysis. And the benefit is the benefit if you don't get caught, and the cost is the probability of getting caught multiplied by the sanction."
The district court was under no obligation to accept or to comment further on Mr. Brown's deterrence argument. In United States v. Schmitz, 717 F.3d 536, 542 (7th Cir. 2013), the defendant pleaded guilty to mail fraud, and the resulting guidelines sentence was 87 to 108 months. Before the district court, the defendant argued that the recently increased "penalties for fraud offenses represented a departure from the philosophy animating the original version of the Guidelines, namely that a short but definite period of incarceration would suffice as a deterrent to most white collar offenders." Id. at 539. The district court, without explicitly addressing
On appeal, we determined that Schmitz's argument was "not one addressed to his own characteristics and circumstances," but "was a categorical challenge to the validity of the fraud guideline, on the ground that the severity of sentences called for by the current incarnation of that guideline is unsupported by any empirical data demonstrating the need" for longer sentences. Id. at 542. Because it was a "blanket challenge to the guideline rather than one tailored to [the defendant's] unique characteristics and circumstances, it [wa]s not one that the district judge [had to] explicitly address." Id. Moreover, the district court "was perfectly entitled to accept the penal philosophy embodied in the current fraud guideline and was not obligated to explain why [it] chose to do so." Id.; see also United States v. Hancock, 825 F.3d 340, 344 (7th Cir. 2016) (quoting Schmitz for the proposition that a district court need not address Hancock's policy argument that "the Guidelines' offense-level increases for receipt, transport, possession, or distribution of child-pornography, fit poorly with modern practical realities" and specifically reiterating that "the district judge was `perfectly entitled to accept the penal philosophy embodied in the current [child-pornography] guideline'" (alteration in original)).
Like the district courts in Schmitz and Hancock, here the district court was "perfectly entitled to accept the penal philosophy embodied" in the Guidelines that societal goals are served by increasing fraud sentences to reflect the amount of loss, as opposed to imposing only nominal sentences. We find no substantive or procedural error in the district court's imposition of sentence on Mr. Brown.
We turn now to Ms. Talaga's sentence. She takes issue with one of the factual bases on which the court's calculation of loss rests. Specifically, she claims that the district court's calculation of loss should not include amounts for claims dating back to 2007 because the Government did not prove that she was aware at that time that the claims were fraudulent. We review the district court's determination of loss for clear error, see United States v. Diamond, 378 F.3d 720, 726 (7th Cir. 2004), and will reverse the district court "only if we are left with the definite and firm conviction that a mistake was made," United States v. Bryant, 557 F.3d 489, 497 (7th Cir. 2009) (internal quotation marks omitted).
The record supports the district court's conclusion that, in 2007, Ms. Talaga would have known that her submissions were fraudulent. Before the district court, Ms. Talaga argued that she had training in Medicare billing and "was intimately familiar with the billing procedures of the medical practice."
Having convinced the district court of her expertise, Ms. Talaga now tries to discount the training she received. As we already have noted, however, in addition to her formal education, Ms. Talaga was an experienced Medicare biller when she arrived at Medicall. There was testimony that she performed her work quickly, that she knew how to re-code rejected claims so that they would be paid, and that she trained other staff.
Ms. Talaga also submits that other evidence in the record undermines the court's conclusion that she would have recognized the fraud. Ms. Talaga points to the testimony of another Medicall biller, Arian Shogren, who stated that she initially believed that all patients actually were receiving Care Plan Oversight. However, Shogren did not have experience with Medicare billing before she began working at Medicall. Indeed, when she began working at Medicall, she was a technician who did scheduling, took vitals, and kept track of patients' medications.
Second, Ms. Talaga observes that one Government witness, Kelly Hartung, gave conflicting definitions of Care Plan Oversight. In her view, because the Government's own witness could not articulate consistently a definition for Care Plan Oversight, it "is unrealistic" to expect that she would have been able to recognize that the bills for Care Plan Oversight were fraudulent.
Ms. Talaga has not established that the district court committed clear error in holding her responsible for fraudulent claims from the beginning of her tenure
For the foregoing reasons, we affirm the district court's judgments with respect to the sentences of Mr. Brown and Ms. Talaga.
AFFIRMED.
Similarly in United States v. Bradley, 628 F.3d 394, 395 (7th Cir. 2010), the district court imposed a sentence that was 169 months above the guidelines range. The district court believed a severe penalty was necessary because, according to the court, the defendant had a long, undiscovered history of engaging in sexual activity with minors. However, there was no evidence in the record that the defendant had engaged in sexual activity with any minor except for the victim. In reviewing the sentence, we observed that the district court had made "a questionable ... prediction about future conduct based on rank speculation about other, multiple instances of deviant behavior." Id. at 401. Here, the court did not engage in any speculation about the defendant's past or future conduct, and speculation was not used to justify an above-guidelines sentence. Cf. United States v. Martin, 718 F.3d 684, 688 (7th Cir. 2013) (noting that, "although we have held that a district court's unfounded speculation that sex offenders are not deterrable may necessitate remand, we have done so only where the court imposed an above-guidelines sentence for purposes of deterrence" (citation omitted)).
