Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-06-04604/USCOURTS-ca4-06-04604-0/pdf.json

Parties Involved:
Brian Conner
Appellant
Convalescent Transports, Incorporated

United States of America
Appellee

Document Text:

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 06-4604

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

versus

BRIAN CONNER,

Defendant - Appellant,

and

CONVALESCENT TRANSPORTS, INCORPORATED,

Defendant.

Appeal from the United States District Court for the Eastern

District of North Carolina, at New Bern. Louise W. Flanagan, Chief

District Judge. (4:04-cr-00027-FL-ALL)

Argued: December 7, 2007 Decided: January 25, 2008

Before MICHAEL and TRAXLER, Circuit Judges, and James P. JONES,

Chief United States District Judge for the Western District of

Virginia, sitting by designation.

Affirmed by unpublished opinion. Judge Jones wrote the opinion, in

which Judge Michael and Judge Traxler joined.

ARGUED: Joseph Blount Cheshire, V, CHESHIRE, PARKER, SCHNEIDER,

BRYAN & VITALE, Raleigh, North Carolina, for Appellant. Banumathi

Rangarajan, Assistant United States Attorney, OFFICE OF THE UNITED

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STATES ATTORNEY, Raleigh, North Carolina, for Appellee. ON BRIEF:

John Keating Wiles, CHESHIRE, PARKER, SCHNEIDER, BRYAN & VITALE,

Raleigh, North Carolina, for Appellant. George E. B. Holding,

United States Attorney, Anne M. Hayes, Assistant United States

Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North

Carolina, for Appellee. 

Unpublished opinions are not binding precedent in this circuit.

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JONES, Chief District Judge:

Appellant Brian Conner was convicted by a jury in the court

below after a thirteen-day trial of multiple counts of health care

fraud, 18 U.S.C.A § 1347 (West 2000), conspiracy to commit health

care fraud, and obstruction of the criminal investigation of health

care offenses, 18 U.S.C.A § 1518 (West 2000). He was sentenced on

May 3, 2006, to a total term of imprisonment of 151 months. In his

appeal, Conner seeks re-sentencing on the ground that the district

court erred in properly calculating his guideline range under the

advisory sentencing guidelines. 

In particular, Conner argues that the district court (1)

should not have increased his offense level for abuse of a position

of trust pursuant to U.S. Sentencing Guidelines Manual (“USSG”) §

3B1.3 (2005), and (2) erred in relying on the government’s

statistical evidence in calculating the amount of loss under USSG

§ 2B1.1(b). After a careful consideration of the record and the

appellant’s arguments, we find that his sentence must be affirmed.

I.

As part of the federal sentencing process, a district court

must first correctly calculate the applicable guideline range

established by the now-advisory sentencing guidelines. Gall v.

United States, 128 S. Ct. 586, 596 (2007). When contested by the

defendant, the government has the burden of proving by a

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Medicare is a federal health care program principally for

older Americans, administered by the U.S. Department of Health and

Human Services, largely through delegation to private insurance

companies. Medicaid is a federal health care program for those

with insufficient financial resources, administered by state

governments.

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preponderance of the evidence the facts supporting an abuse of

trust enhancement, see United States v. Hill, 322 F.3d 301, 307

(4th Cir. 2003), as well as the amount of loss, see United States

v. Miller, 316 F.3d 495, 503 (4th Cir. 2003). The district court’s

factual determinations in calculating the guideline range are

reviewed on appeal for clear error. Elliott v. United States, 332

F.3d 753, 761 (4th Cir. 2003). 

In Conner’s case, the district court conducted a two-day

evidentiary hearing on the sentencing issues. Considering the

evidence in the light most favorable to the government, the facts

upon which the district court determined the guideline sentencing

range are as follows.

In 1990 Conner, a certified emergency medical technician,

became the owner and operator of Convalescent Transports, Inc.

(“CTI”), a business providing ambulance and wheelchair

transportation services to patients. The business was

headquartered in Kinston, North Carolina, with offices in other

North Carolina locations. In 1991 CTI became an authorized

provider of reimbursed Medicare and Medicaid ambulance services.1

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The evidence showed that the average round-trip cost of a

wheelchair van trip was $35, as opposed to the average cost of an

ambulance trip of $437.48. (J.A. II-538.) In addition, for many

nursing home residents, the nursing home itself is required by

Medicaid to provide wheelchair van service and is paid for that

service.

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The Medicare and Medicaid programs both require a showing of

medical necessity before they will reimburse providers for

ambulance services. A provider is required to complete an

“Ambulance Call Report” that states the clinical conditions

rendering the patient bed confined or otherwise justifying the

patient’s non-emergency transport by ambulance. Beginning in 1999,

Medicare required a physician’s certificate stating the patient’s

condition and the reasons why the patient could not be transported

by means other than ambulance, such as a less expensive wheelchair

van.2 

Most of the patients transported by CTI were nursing home

residents. CTI had as many as 300 employees and transported

patients from at least fifty nursing homes. It was Medicare’s

highest paid private ambulance service in North Carolina. In the

five-year period between 1997 and 2002, CTI received $19,446,572

from Medicare and Medicaid for ambulance transports. 

Conner led the conspiracy to defraud Medicare and Medicaid.

He and others under his supervision instructed CTI employees to

falsify Ambulance Call Reports and other billing records to show

medical necessity when none existed and provided training to CTI

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3With these recommendations, Conner had a Total Offense Level

of thirty-two, which, with his Criminal History Category of I,

resulted in a guideline range of 121 to 151 months imprisonment.

See USSG ch. 5, pt. A. The sentence imposed was at the high end of

this range. Aside from his attacks on the district court’s

guidelines determinations, Conner does not contend that his

sentence of 151 months was unreasonable.

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employees on the methods to be used in falsifying the records.

Employees were instructed to transport all dialysis patients by

ambulance regardless of their medical condition. After 1999, CTI

falsified physicians’ certifications by various means, including

whiting out the dates of prior certifications and inserting

different dates. 

In the presentence investigation report (“PSR”), the authoring

probation officer recommended that Conner receive a two-level

increase in his offense level under USSG § 3B1.3 for abuse of a

position of trust. In addition, the probation officer found that

the loss arising from Conner’s criminal conduct was more than

$2,500,000 but not more than $7,000,000, thus resulting in an

increase of eighteen levels under USSG § 2B1.1(b)(1)(J).3 

Conner filed timely objections to both the abuse of trust

enhancement and the amount of loss and these issues, along with

others not raised in this appeal, were the subject of the

sentencing hearing. The district court agreed that Conner was

subject to the abuse of trust enhancement and found that the proper

loss was within the range suggested in the PSR.

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II.

Conner’s first contention is that the district court was

incorrect in applying the abuse of trust enhancement. Conner’s

argument is that the relationship between CTI and the victims of

his offenses—the federal health care programs—was contractual and

not fiduciary, and because he held no other position of trust, such

as a physician or other professional person might, he is not

subject to the enhancement.

Guideline 3B1.3 provides that “[i]f the defendant abused a

position of public or private trust, or used a special skill, in a

manner that significantly facilitated the commission or concealment

of the offense, increase [the offense level] by 2 levels.” USSG §

3B1.3. The commentary by the Sentencing Commission gives as

examples of the appropriate application of this enhancement, “an

embezzlement of a client’s funds by an attorney serving as

guardian, a bank executive’s fraudulent loan scheme, or the

criminal sexual abuse of a patient by a physician under the guise

of an examination.” USSG § 3B1.3 cmt. n.1. 

While Conner’s victims were not the patients transported

(indeed, they received the presumed benefit of ambulance rides) and

thus the relationship is not analogous to those described in the

Sentencing Commission’s examples, we believe that under the facts

of the case the district court did not err in applying the

enhancement.

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Reimbursed medical providers have been held subject to the

abuse of trust enhancement by other circuits. See United States v.

Erhart, 415 F.3d 965, 972-73 (8th Cir. 2005) (enhancement properly

applied to chiropractor who submitted fraudulent bills to insurance

companies); United States v. Hodge, 259 F.3d 549, 556 (6th Cir.

2001)(enhancement properly applied to manager and treating

therapist who falsely billed insurance companies); United States v.

Hoogenboom, 209 F.3d 665, 666, 671 (7th Cir. 2000) (enhancement

properly applied to psychologist who falsely billed Medicare);

United States v. Gieger, 190 F.3d 661, 663, 665 (5th Cir. 1999)

(enhancement properly applied to ambulance transportation service

provider who made fraudulent claims to Medicare); United States v.

Iloani, 143 F.3d 921, 922-23 (5th Cir. 1998) (enhancement properly

applied to chiropractor who submitted fraudulent claims to

insurance companies). Indeed, we have upheld the abuse of trust

enhancement applied to a nursing home operator who perpetrated a

fraud scheme against Medicaid. United States v. Bolden, 325 F.3d

471, 504-05 (4th Cir. 2003).

 Conner seeks to distinguish our Bolden decision from his case

because in Bolden the nursing home operator received prospective

payments from Medicaid, subject to later cost reporting by the

operator. Id. at 480-81. We relied on that entrustment as

evidence of the underlying trust relationship. Id. at 504-05.

Nevertheless, we also pointed out that “[b]ecause of the discretion

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Medicaid confers upon care providers . . . such providers owe a

fiduciary duty to Medicaid. Indeed, we see it as paramount that

Medicaid be able to ‘trust’ its service providers.” Id. at 505

n.41 (citation omitted and emphasis added).

The facts of the present case are not significantly different.

Conner was trusted (through his control of CTI) to properly report

the medical necessity justifying ambulance service for Medicare and

Medicaid patients. Because of the nature of these vast government

programs, it is essential to their functioning that trust be

imposed on the service provider to capably and honestly determine

in the first instance which patient transactions are entitled to

reimbursement. Otherwise, the added delay and expense might

jeopardize the very existence of the programs. 

We find that the district court did not err in applying the

two-level enhancement.

III.

Conner also contends that the district court erred in relying

on the government’s statistical evidence in determining the amount

of loss.

The sentencing guidelines provide that in determining the

amount of loss for the purpose of calculating the offense level in

fraud cases, “[t]he court need only make a reasonable estimate of

the loss. The sentencing judge is in a unique position to assess

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the evidence and estimate the loss based upon that evidence. For

this reason, the court’s loss determination is entitled to

appropriate deference.” USSG § 2B1.1 cmt. n.3(C).

Much of the sentencing hearing below was devoted to the

government’s evidence as to the amount of loss. In its

presentation, the government relied solely on CTI’s Medicare

reimbursement for non-emergency ambulance transportation of

patients to obtain dialysis, for which CTI was paid $6,822,690.54

on 35,328 separate claims.

 A random sample of 230 claims from the total population of

such claims was examined by a medical fraud investigator, who

determined that in all but fourteen of the claims there was no

medical necessity for ambulance transport. A statistician, Suzanne

Moody, Ph.D., testified that the extrapolation of these findings to

the total number of claims produced a loss of $6,330,298, at a

ninety percent confidence level.

The district court, after lengthy testimony by Dr. Moody,

accepted the reliability of the sampling process, although the

court did substantially reduce the loss figure urged by the

government. The medical fraud investigator had fully disqualified

sixty-five of the sample claims on the ground that no medical

documentation existed. Because the district court found that the

government had failed to show that the medical documentation had

not been lost after the seizure of CTI’s records, it treated those

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4The district court also slightly reduced the loss figure to

account for dialysis trips made to and from hospitals, rather than

nursing homes.

5Conner also argues that the sampling process was not shown to

be random, but we find adequate support for the process in the

expert’s testimony concerning the computer program used to generate

the sample claims. 

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sixty-five samples as legitimate, rather than disqualified. The

final loss figure determined by the district court was $3,613,165.4

Conner’s principal argument on appeal is that the samples used

to extrapolate to the total loss figure were not examined for

fraud, but only for medical necessity, and thus the government’s

evidence was unreliable. However, the evidence at trial adequately

supported the finding that this loss was occasioned by the

defendant’s criminal conduct. The pervasive nature of the

fraudulent scheme, as well as the methods used by Conner, justified

the district court’s attribution of fraud to all of the sample

claims.

Extrapolation is an acceptable method to use in making a

reasonable estimate of the amount of loss under the sentencing

guidelines. See United States v. Pierce, 409 F.3d 228, 234 (4th

Cir. 2005) (upholding calculation of fraud loss by extrapolating

from the monthly averages for one period of years to another).

Conner had an opportunity to present any contrary analysis of the

claims sampled, but he did not do so. The district court did not

err in its factual determination of the amount of loss.5

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IV.

For the reasons stated, the judgment below is

AFFIRMED.

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