FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

SEPT. 21, 2001

THOMAS K. KAHN

CLERK

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

 

No. 00-14134

 

D. C. Docket No. 99-00226-CR-T-26A

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

IRA HARVEY LISS,

MICHAEL SPUZA,

Defendants-Appellants.

 

Appeals from the United States District Court

for the Middle District of Florida

 

(September 21, 2001)

Before TJOFLAT, DUBINA and DUHE*, Circuit Judges.

DUBINA, Circuit Judge:

_______________________

*Honorable John M. Duhe, Jr., U. S. Circuit Judge for the Fifth Circuit, sitting by

designation.
1

 Liss and Spuza are medical doctors.

2

Appellants Ira Harvey Liss (“Liss”) and Michael Spuza (“Spuza”)1 appeal

their convictions and sentences imposed by the United States District Court for the

Middle District of Florida. We affirm in part, vacate in part, and remand for

further proceedings.

I. BACKGROUND

The Community Clinical Laboratory, Inc. (“CCL”), was a Florida laboratory

that conducted blood and urine testing. CCL and its employees developed a

scheme to defraud Medicare by paying doctors to refer their Medicare patients to

CCL in return for kickbacks from CCL. In order to pay the doctors for these

referrals in a manner that appeared legal, CCL created a scheme of consulting

agreements with doctors acting as Testing Review Officers (“TROs”). The TRO

agreements purportedly allowed the doctors to authorize lab work for an individual

if his or her own doctor was not available to do so. Thus, the TRO agreements

served to disguise the kickbacks that were given in return for the patient referrals.

In November 1995, CCL entered into a consulting agreement with Liss, in

which Liss agreed to act as a TRO in exchange for $1,000 a month. From

November 1995 until April 1998, CCL paid Liss a total of $29,000. Liss did not

receive any other form of compensation from CCL. Medicare reimbursed CCL
3

$183,847.31 as a result of Liss’s referrals. The government concedes that all of

those referrals were made for legitimate medical reasons.

In August 1996, CCL entered into a consulting agreement with Spuza, in

which Spuza agreed to act as a TRO in exchange for $600 a month. From August

1996 until April 1998, CCL paid Spuza $12,000 for his TRO services. In addition

to the TRO payments, CCL made 28 equipment sublease payments on behalf of

Spuza and his mother, Dr. Felicia Spuza, who operated the practice jointly with

Spuza. These sublease payments totaled $33,679.80. CCL also made office rental

payments for the Spuzas. These rental payments totaled $9,691.56. The

presentence investigation report (“PSI”) reflects that CCL paid Spuza a total of

$55,371.36. Medicare reimbursed CCL $269,004.73 as a result of the referrals

made by the Spuzas. It is undisputed that those referrals were made for legitimate

medical reasons.

A superceding indictment charged Liss and Spuza with one count of

conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and five

counts of receiving remuneration in return for Medicare referrals, in violation of 42

U.S.C. § 1320a-7b(b)(1). At Liss and Spuza’s joint trial, Vincent Gepp (“Gepp”),

a CCL sales representative, testified that the way in which CCL paid the illegal

kickbacks included payments for the TRO agreements and office and equipment

rentals. Gepp also testified that CCL made payments for office space and
4

equipment in exchange for Spuza referring his patients to CCL for laboratory

work. The jury found Liss and Spuza guilty on all counts.

The PSI combined all counts into a single group because the offense level

was to be determined by the total amount of harm or loss, pursuant to U.S.S.G. §

2D1.2(d). The PSI also assigned Liss and Spuza a base offense level of eight

based on U.S.S.G. § 2B4.1, which is the guideline for fraud or deceit. For Liss, the

PSI relied on U.S.S.G. § 2F1.1(b)(1)(E) and added four levels to reflect the

$29,000 amount in illegal kickbacks. For Spuza, the PSI added five levels to

reflect the $55,371.36 amount in illegal kickbacks, pursuant to U.S.S.G. §

2F1.1(b)(1)(F). The PSI then added two levels to both Liss and Spuza’s sentences

under U.S.S.G. § 3B1.3, asserting that they had breached the trust of Medicare by

accepting illegal compensation for Medicare referrals. The PSI assigned another

two-level increase to Liss for obstruction of justice, contending that Liss

committed perjury at trial. This resulted in a total offense level of 16 for Liss. 

Based on Liss’s absence of a criminal background, the PSI did not assess any

criminal history points. This resulted in a criminal history category of I and a

guideline range of 21-27 months imprisonment for Liss. Likewise, based on

Spuza’s absence of a criminal background, the PSI did not assess any criminal

history points. This resulted in a criminal history category of I and a guideline

range of 18-24 months for Spuza. Pursuant to 18 U.S.C. § 3663A, the PSI set
5

restitution in Liss’s case in the amount of $29,000. For Spuza, restitution was set

in the amount of $55,371.36.

At sentencing, the district court heard extensive arguments on Liss’s

objection to the enhancement for abuse of trust. Liss asserted that the abuse of

trust enhancement should not be applied in his case because, under Eleventh

Circuit case law, he did not occupy a position of trust vis-a-vis Medicare, and even

if he did occupy such a position, his conduct did not constitute an abuse of trust

because he did not falsify records or submit fraudulent documents to Medicare. 

The district court overruled Liss’s objection, finding that physicians likely occupy

positions of trust with regard to Medicare.

The district court sustained Liss’s objection to the obstruction of justice

enhancement, concluding that, based on its recollection of Liss’s trial testimony, it

was not convinced that Liss had obstructed justice. The district court overruled

Liss’s objection as to restitution. Finally, Liss offered testimony in support of his

motion for a downward departure, alleging that he was entitled to a downward

departure on the grounds of (1) physical health, (2) family ties, (3) contribution to

the community, and (4) lesser harms. The district court denied Liss’s motion as to

each ground, finding that none of the grounds, even combined, warranted a

departure. The district court sentenced Liss to 15 months imprisonment on each
6

count, to run concurrently, and ordered Liss to pay a fine of $5,000, and restitution

in the amount of $29,000.

Spuza objected to the PSI, claiming that the PSI’s factual account should not

include information regarding other individuals’ offenses. Spuza made the same

objection as Liss concerning the enhancement for abuse of trust, arguing that,

under Eleventh Circuit case law, the enhancement was unwarranted. Spuza also

contested the inclusion of the office rent and equipment sublease payments as

remuneration under § 2B4.1. He argued that those payments were legitimate and

that he had received no funds from CCL for the equipment sublease because CCL

paid the bank directly. Spuza further opposed the imposition of restitution,

maintaining that Medicare did not suffer any loss attributable to his receipt of

kickbacks from CCL. Finally, Spuza claimed that he was entitled to a downward

departure under U.S.S.G. § 5K2.11 because his conduct did not cause the kind of

harm that the anti-kickback statute sought to prevent.

With regard to Spuza’s argument that the office rental and equipment

sublease payments should not be included in the calculation under § 2B4.1, the

district court found that there was sufficient evidence to show that those payments

constituted remuneration within the meaning of the statute. Spuza then contested

the amount of remuneration, contending that even if the equipment sublease

payments were remuneration, he should not be accountable for more than half of
7

the total amount because the equipment sublease ran from CCL to his mother, who

owned half of the medical practice. The district court overruled Spuza’s objection

as to the amount or value of the remuneration for both payments, agreeing with the

government’s position that Spuza was liable for the full amount based on the

language in the anti-kickback statute. In regard to Spuza’s objection to receiving

an enhancement for abuse of trust, the court stated that it had already decided this

issue contrary to Spuza’s position when it applied the enhancement in Liss’s case. 

The district court also overruled Spuza’s objection concerning restitution,

reluctantly finding that this circuit’s decision in United States v. Vaghela, 169 F.3d

729, 736 (11th Cir. 1999), was controlling.

After hearing from Spuza, the district court overruled the government’s

objection that Spuza should have received an enhancement for his role in the

offense, finding that there was no basis for the enhancement. The district court

also heard extensive arguments from Spuza as to why he was entitled to a

downward departure pursuant to U.S.S.G. § 5K2.11. Spuza’s primary argument

was based on the proposition that his conduct did not cause the kind of harm

contemplated by the statute. Spuza also contested the government’s assertion that

the plain language of the statute was aimed at preventing the receipt of kickbacks

for patient referrals, which was exactly what Spuza had done. The district court

denied Spuza’s motion, finding that the statute was clear on its face that you shall
8

not refer for kickbacks. Consequently, the district court sentenced Spuza to 18

months imprisonment on each count, to run concurrently, and ordered that Spuza

pay restitution in the amount of $55,371.36.

Liss and Spuza then perfected their appeals.

II. ISSUES

A. Liss

(1) Whether the district court erred in denying Liss’s motion to sever.

(2) Whether the district court erred in denying Liss’s motion to dismiss the

superseding indictment’s single conspiracy charge.

(3) Whether the district court erred in applying an abuse of trust

enhancement to Liss’s sentence.

B. Spuza

(1) Whether Spuza is entitled to a new trial because he was misjoined for

trial with alleged co-conspirator Liss and their trials should have been severed.

(2) Whether the district court erred in applying the sentencing guidelines by

including the office rental and equipment sublease payments in its calculation of

the amount of loss.

(3) Whether the district court erred by imposing an upward adjustment for

abuse of trust.
9

(4) Whether the district court erred by concluding it lacked the authority to

consider a downward departure for lesser harms under U.S.S.G. § 5K2.11.

(5) Whether the district court erred by ordering Spuza to pay restitution to

the government.

III. STANDARDS OF REVIEW

A claim under Rule 8(b) of the Federal Rules of Criminal Procedure is

considered a question of law subject to plenary review. United States v. Castro, 89

F.3d 1443, 1450 (11th Cir. 1996). A defendant must show actual prejudice through

a substantial and injurious effect on the jury’s verdict before he can obtain a new

trial. United States v. Lane, 474 U.S. 438, 449 (1986).

In contrast, we review for abuse of discretion a motion for severance filed

under Rule 14 of the Federal Rules of Criminal Procedure. United States v. Schlei,

122 F.3d 944, 983 (11th Cir. 1997). To obtain a reversal on the basis of the denial

of a severance motion, the defendant must demonstrate that the joint trial resulted

in specific and compelling prejudice to the conduct of his defense. Id. at 983-84.

This court reviews a district court’s findings of fact regarding sentencing for

clear error and the district court’s application of those facts to the sentencing

guidelines de novo. United States v. Smith, 127 F.3d 1388, 1389 (11th Cir. 1997). 

We review a restitution order for abuse of discretion. United States v. Davis,

117 F.3d 459, 462 (11th Cir. 1997). 
10

This court has no jurisdiction to review a sentencing judge’s denial of a

downward departure unless it was made based upon belief that he or she did not

possess the discretionary authority to depart downward. United States v. Calderon,

127 F.3d 1314, 1342 (11th Cir. 1997).

IV. DISCUSSION

A. Misjoinder/Severance

Liss and Spuza argue that they were misjoined in count one of the

superseding indictment, and that the district court should have severed their trials.

Federal Rule of Criminal Procedure 8(b) is a pleading rule. United States v.

Morales, 868 F.2d 1562, 1567-68 (11th Cir. 1989). The rule permits two or more

defendants to be charged in the same indictment if “they are alleged to have

participated in the same act or transaction or in the same series of acts or

transactions constituting an offense or offenses.” Fed. R. Crim. P. 8(b). Therefore,

joinder under Rule 8(b) is proper “where, as here, an indictment charges multiple

defendants with participation in a single conspiracy and also charges some but not

all of the defendants with substantive counts arising out of the conspiracy.” United

States v. Alvarez, 755 F.2d 830, 857 (11th Cir. 1985). The propriety of joinder “is

to be determined before trial by examining the allegations contained in the

indictment.” Morales, 868 F.2d at 1567-68.
11

Count one of the superseding indictment charged Liss and Spuza with

conspiring with CCL and other defendants to defraud the United States by

obtaining kickbacks for the referral of Medicare patients. Thus, under Rule 8(b),

Liss and Spuza were properly charged in the same indictment. See Morales, 868

F.2d at 1569-70 (concluding that joinder of parties was proper under Rule 8(b)

because the indictment named all defendants-appellants in single conspiracy

count).

Although Liss purports to challenge his joinder with Spuza in count one,

Liss does not even refer to the allegations in count one, let alone argue that those

allegations do not charge his and Spuza’s participation in the same offense. 

Rather, he argues that the evidence at trial did not support a finding that he and

Spuza participated in the same conspiracy. The trial evidence, however, may not

be used to establish that joinder under Rule 8(b) was improper. See Morales, 868

F.2d at 1568; see also United States v. Dominguez, 226 F.3d 1235, 1240 (11th Cir. 

2000) (noting that this court looks only to the indictment in order to determine if

the appellants' initial joinder was proper under Rule 8(b)). Given the allegations in

the indictment, we conclude there was no Rule 8(b) violation in this case, and,

even if there had been such a violation, it would have been harmless because the

defendants can not show that their joint trial resulted in actual prejudice; i.e., that it
12

had a substantial and injurious effect or influence in determining the jury’s verdict. 

See Lane, 474 U.S. 438 at 449.

Likewise, we conclude that the defendants were not entitled to a severance

and that the district court did not err in denying their motions. Severance under

Rule 14 of the Federal Rules of Criminal Procedure is warranted only when a

defendant demonstrates that a joint trial will result in “specific and compelling

prejudice” to his defense. United States v. Walker, 720 F.2d 1527, 1533 (11th Cir.

1983). Compelling prejudice occurs when the jury is unable “to separately

appraise the evidence as to each defendant and render a fair and impartial verdict.” 

United States v. Meester, 762 F.2d 867, 883 (11th Cir. 1985).

After reviewing the record, we conclude that neither Liss nor Spuza suffered

compelling prejudice from their joint trial. There was no reasonable likelihood that

the jury transferred the applicability of evidence from Liss to Spuza or vice-versa. 

Liss and Spuza were the only two defendants on trial, only two types of charges

were at issue (conspiracy and receiving kickbacks), and the evidence as to each

separate charge and defendant was distinct, clear, and uncomplicated. Moreover,

the district court cautioned the jury to assess the evidence independently for each

count and each defendant, thus further ameliorating the possibility of prejudice. 

Indeed, Liss and Spuza acknowledge that the key witnesses against Liss (CCL

sales representative Richard Holt and CCL owner James McCowan, Jr.) were
2

 United States v. Garcia, 211 F.3d 128 (11th Cir. 2000) (Table), is an unpublished opinion

directly on point because it involved a physician who obtained fraudulent Medicare reimbursement.

In Garcia, we held that “[t]he district court could properly have found that Garcia was just that

discretion-possession physician (or, in this case, psychiatrist) that section 3B1.3 envision[ed]; it was

the trust that Medicare proposed in Garcia as a medical professional that permitted him to oversee

the falsification of patient-treatment records to accomplish the fraud.” Id. (internal marks and

citations omitted). Although Garcia represents persuasive authority, it is not binding precedent.

See 11th Cir. R. 36-2. Therefore, we consider the issue before us to be one of first impression. 

13

different from the key witnesses against Spuza (CCL sales representative Vincent

Gepp, and Rule 404(b) witnesses Ethan Schlau and Jason Welles). Defendants

further acknowledge that the only common witness was the Medicare

representative who testified about the number of referrals Liss and Spuza made to

CCL. Given the virtually distinct evidence as to Liss and Spuza, they could not

have suffered compelling prejudice from being tried jointly.

In conclusion, we see no merit to any of the arguments Liss and Spuza make

concerning this issue.

B. Enhancement for Abuse of Position of Trust

Liss and Spuza argue that the district court erred in enhancing their

respective offense levels by two levels each. The enhancements were assessed for

abuse of a position of trust or use of a special skill, pursuant to U.S.S.G. § 3B1.3. 

The abuse of trust enhancement presents a question of first impression in this

circuit.2
14

In United States v. Garrison, 133 F.3d 831 (11th Cir. 1998), we held that

“[f]or the enhancement to apply, defendant must have been in the position of trust

with respect to the victim of the crime, and the position of trust must have

contributed in some significant way to facilitating the commission or concealment

of the offense.” Id. at 837 (internal marks and citations omitted). We went on to

hold that “the abuse of trust enhancement applies only where the defendant has

abused discretionary authority entrusted to the defendant by the victim; arm’slength business relationships are not available for the application of this

enhancement.” Id. at 839 (internal marks and citations omitted).

Of the other circuits that have addressed whether a physician occupies a

position of trust in relation to Medicare, or a private insurance carrier, all have

answered that question in the affirmative. See United States v. Ntshona, 156 F.3d

318, 321 (2d Cir. 1998) (upholding abuse of trust enhancement where a physician

defrauded Medicare by signing false claims); United States v. Sherman, 160 F.3d

967, 969-71 (3d Cir. 1998) (upholding abuse of trust enhancement based on

physician’s abuse of trust with respect to defrauded insurance company); United

States v. Adam, 70 F.3d 776, 782 (4th Cir. 1995) (upholding abuse of trust

enhancement for an internist who took illegal kickbacks from a cardiologist in

exchange for patient referrals); United States v. Iloani, 143 F.3d 921, 922-23 (5th

Cir. 1998) (upholding abuse of trust enhancement based on chiropractor’s position
15

of trust with respect to insurance company, where a chiropractor conspired with

patients to submit fraudulent bills to insurance companies); United States v.

Hoogenboom, 209 F.3d 665, 671 (7th Cir. 2000) (upholding abuse of trust

enhancement for psychologist who billed Medicare for services that had not been

performed or services not performed as billed); United States v. Rutgard, 116 F.3d

1270, 1293 (9th Cir. 1997) (upholding abuse of trust enhancement for

ophthalmologist who made false entries in his medical records in effecting

Medicare fraud).

Of the circuits noted above, only the Fourth Circuit has addressed the

identical factual question presented here; i.e., assuming that a physician does

occupy a position of trust, vis-a-vis Medicare, does the physician abuse that

position of trust when the physician receives kickbacks for patient referrals, where

the referrals were medically necessary and the physician does not falsify patient

records or submit fraudulent claims to Medicare? See Adam, 70 F.3d at 782. After

considering the applicable law and the special position that physicians hold within

the Medicare system, the Fourth Circuit answered this question in the affirmative. 

Id. Suffice it to say that we agree with the Fourth Circuit’s analysis in Adam and

adopt its analysis and holding. For that reason, we affirm the two-level

enhancement for abuse of a position of trust.

C. Office Rental and Equipment Sublease Payments
16

Spuza argues that the district court erred in including the office rental and

equipment sublease payments in its calculation of the amount of loss, pursuant to

U.S.S.G. § 2B4.1, because neither of the above-mentioned payments represented

remuneration in exchange for kickbacks, but rather were payments under legitimate

fair market agreements. Spuza also argues that the government failed to meet its

preponderance burden with regard to the enhancement because no evidence

supported the conclusion that these payments were kickbacks. Spuza further

argues that, even if the payments were found to be remuneration for patient

referrals, the government failed to carry its burden to show that the value to Spuza

of the equipment subleases was $33,379.80 because: (1) he was not responsible

for the lease, rather it ran from the bank to his mother; (2) he owned only half of

the medical practice, and thus would have received only half the value; (3) it was

improper to calculate the value simply by adding up all payments CCL made to the

bank; and (4) the proper inquiry was what the value was to Spuza of alleviating his

mother’s liability on the lease.

The government responds that the district court did not clearly err in finding

that both of these categories of payments constituted kickbacks because the

evidence established that all of the agreements between CCL and Spuza were

subterfuges for the overall agreement to pay kickbacks in exchange for patient

referrals. It also contends that the district court properly rejected Spuza’s claim
17

that the value of the kickbacks was overstated because, even though Spuza’s

mother owned half of the medical practice and was on the equipment lease, Spuza

still benefitted by CCL’s payments because the debt of the medical practice was

reduced.

The Sentencing Guidelines set a base offense level of eight for cases

involving the offer or acceptance of payment to refer an individual for services or

items paid for by Medicare. U.S.S.G. § 2B4.1(a), comment. (backg’d). The base

offense level is then increased according to the table in § 2F1.1 when “the greater

of the value of the bribe or the improper benefit to be conferred exceed[s] $2,000.” 

U.S.S.G. § 2B4.1(b)(1). This amount of loss, however, “need not be determined

with precision [and] [t]he court need only make a reasonable estimate of loss,

given the available information.” U.S.S.G. § 2F1.1, comment. (n.9). “Upon

challenge, however, the government bears the burden of supporting its loss

calculation with reliable and specific evidence.” United States v. Cabrera, 172

F.3d 1287, 1292 (11th Cir. 1999) (internal marks and citations omitted). “When a

defendant challenges one of the bases of his sentence as set forth in the PS[I], the

government has the burden of establishing the disputed fact by a preponderance of

the evidence.” United States v. Lawrence, 47 F.3d 1559, 1566 (11th Cir. 1995). 

“A sentencing court must make factual findings sufficient to support the

government’s claim of the amount of fraud loss attributed to a defendant in a PSI.” 
18

Cabrera, 172 F.3d at 1294. This court reviews for clear error a district court’s

determination of loss from fraud for sentencing purposes. Id. at 1292.

Here, the district judge, who presided over Spuza’s trial and sentencing,

concluded that there was sufficient evidence to show that the payments for office

and equipment rental constituted remuneration within the statute. The record

supports the district court’s conclusion because Gepp testified at trial that CCL’s

payments for office space and equipment were made in exchange for Spuza

referring his patients to CCL for laboratory work. The district court, therefore, did

not clearly err by finding that these payments were remuneration. Once Spuza

objected to the amount attributed to the equipment sublease payments, however,

the government was required to support its loss calculation with reliable and

specific information, see Cabrera, 172 F.3d at 1292, and the district court was

required to make factual findings sufficient to support the government’s claim that

the amount of fraud loss attributed to Spuza was that which was contained in the

PSI. See id. at 1294. 

The only information that the government provided regarding its calculation

was that contained in the PSI. The government then referenced the language of the

anti-kickback statute in support of its proposition that Spuza was required to pay

the full amounts that CCL had paid on the office rent and equipment subleases. 

The district court made no factual findings in support of the government’s claim;
19

rather, it stated that it agreed with the government’s position that Spuza was liable

for the full amount based on the language in the anti-kickback statute. Although

the district court did not clearly err by finding that the payments for office space

and equipment were in fact remuneration for referrals, we conclude that it did fail

to make sufficient factual findings regarding the amount of loss as detailed in the

PSI. See id. Accordingly, we must vacate the district court’s finding as to the

value or amount attributed under § 2F4.1 in regard to the equipment sublease

payments, and remand to the district court for further findings.

D. Downward Departure

A district court’s refusal to depart downward from the sentencing guideline

range normally is not reviewable on appeal, unless the district court denied the

departure because it erroneously believed that it had no authority to depart

downward. United States v. Rudisill, 187 F.3d 1260, 1265 (11th Cir. 1999). After

reviewing the record, we conclude that the district court fully understood that §

5K2.11 authorizes downward departures in limited circumstances. However, the

court determined that Spuza’s conduct did not warrant a downward departure. 

Accordingly, the district court’s decision is unreviewable by this court. See

Rudisill, 187 F.3d at 1265-66.

E. Restitution
20

Spuza contends that the district court erred by ordering him to pay restitution

in the amount of the kickbacks that he received from CCL because the government

offered no evidence to suggest that the Medicare program suffered any loss

attributable to his receipt of remuneration from CCL. Spuza also argues that this

circuit’s decision in United States v. Vaghela, 169 F.3d 729 (11th Cir. 1999), is not

controlling because in that case Vaghela conceded that he owed restitution in the

amount of kickbacks that he had received. Spuza also argues that because all of

the referrals that he made to CCL were medically necessary, and because he was

not involved in fraudulent billing, it was error to assume that Medicare suffered a

loss based on his offense conduct. 

An award of restitution must be based on the amount of loss actually caused

by the defendant’s conduct. See United States v. Martin, 195 F.3d 961, 968 (7th

Cir. 1999). The government bears the burden of proving the amount of the loss. 

18 U.S.C. § 3664(e); United States v. McIntosh, 198 F.3d 995, 1003 (7th Cir. 

2000).

In the present case, the government has offered no evidence to suggest that

the Medicare program suffered any loss attributable to Spuza’s receipt of

remuneration from CCL. Medicare paid CCL a fixed amount for its tests. The

amount paid by Medicare to CCL was not affected by what CCL did with the

money it received. Although CCL may owe restitution if it fraudulently billed for
3

 As previously discussed, only the Fourth Circuit has addressed a context factually similar

to that of the instant appeal; i.e., a physician who received illegal kickbacks in exchange for

Medicare patient referrals. See United States v. Adam, 70 F.3d 776, 782 (4th Cir. 1995). It is

noteworthy, that in Adam, the district court sentenced Adam to 18 months imprisonment and

assessed a $40,000 fine. Id. at 779. Although the district court increased Adam’s base offense level,

pursuant to U.S.S.G. § 2F1.1(b)(1)(F), for the amount of loss (which included the amount of

kickbacks), the court’s order made no mention of restitution. Id. at 778-79.

21

the services allegedly referred by Spuza, billing fraud is not a part of Spuza’s

offense conduct. 

Our decision in Vaghela is not controlling because in that case the defendant

conceded he owed restitution in the amount of the kickbacks he received. 169 F.3d

at 736. All of the parties in Vaghela apparently assumed that a loss resulted from

the offense conduct. See id. There is no basis for such an assumption here because

the medical necessity of the referrals is unquestioned. Accordingly, we must

vacate the district court’s restitution order.3

In conclusion, we affirm Liss’s and Spuza’s convictions and Liss’s

sentences. We vacate Spuza’s sentences and remand this case to the district court

for resentencing consistent with this opinion.

AFFIRMED in part, VACATED in part, and REMANDED.
22