IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Nos. 11-20102, 11-20167, 11-20204

UNITED STATES OF AMERICA

Plaintiff–Appellee

v.

ARUN SHARMA, KIRAN SHARMA

Defendants–Appellants

Appeals from the United States District Court 

for the Southern District of Texas

Before WIENER, CLEMENT, and PRADO, Circuit Judges.

WIENER, Circuit Judge:

Defendants–Appellants Dr. Arun Sharma (“Arun”) and Dr. Kiran Sharma

(“Kiran”) pleaded guilty to defrauding health-care insurers by billing for pain

injections that they never administered. As part of their sentences, the district

court ordered them to pay $43,318,170.93 in restitution to thirty-two victims

defrauded by the scheme, viz., Medicare, Medicaid, and thirty private insurers. 

The Sharmas appeal the amount of restitution, contending that it exceeds the

insurers’ actual losses. Arun also claims that the government breached his plea

agreement.

United States Court of Appeals

Fifth Circuit

F I L E D

December 20, 2012

Lyle W. Cayce

Clerk

 Case: 11-20102 Document: 00512091609 Page: 1 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

I. Facts & Proceedings

Arun and Kiran are physicians married to each other who operated two

pain management, arthritis, and allergy clinics in Houston, Texas. From 1998

to 2009, they conspired to defraud Medicare, Medicaid, and many private

insurance companies of millions of dollars by billing for paravertebral facet-point

injections that they never administered to patients. Sometimes, the Sharmas

would actually administer a cheaper, faster, “trigger-point injection” but would

“upcode” the procedure and bill insurers for the more expensive facet-point

injection. Other times, the Sharmas would submit “phantom” bills for injections

or patient visits that never happened.

The Sharmas were indicted on sixty-four counts of conspiracy, health-care

fraud, mail fraud, unlawful distribution of controlled substances, and money

laundering. Eventually, each pleaded guilty to (1) one count of conspiracy to

commit health-care and mail fraud and (2) one substantive count of health-care

fraud, in violation of 18 U.S.C. § 1347. The counts of conviction related to the

injection-billing fraud but not to any other charged conduct, such as unlawful

distribution of controlled substances. In their plea agreements, the Sharmas

agreed to pay restitution to the insurer victims in an amount to be set by the

district court. They also agreed to specified forfeitures, including a money

judgment to be rendered by the sentencing court in the same amount as the

restitution award. Finally, the government agreed to place $1,500,000 of the 

seized funds in an educational trust for the benefit of the Sharmas’ son.1

The United States Probation Office (“Probation Office”) prepared

Presentence Investigation Reports (“PSRs”) for both defendants. The PSRs

The plea agreements also contained appeal waivers. At oral argument, the 1

government conceded that the waivers do not bar this appeal of restitution orders that

purportedly exceed the statutory maximum authorized by the Mandatory Victim Restitution

Act. See United States v. Chem. & Metal Indus., Inc., 677 F.3d 750, 752 (5th Cir. 2012).

2

 Case: 11-20102 Document: 00512091609 Page: 2 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

calculated thatthe actual loss to Medicare, Medicaid, and thirty private insurers

totaled $43,318,170.93, and recommended restitution in that amount. The

Sharmas objected, primarily because the recommendation did not give them a

credit for amounts that the insurers would have paid for the trigger-point

injections that were actually administered. They also objected that the

$43,318,170.93 total overstated the insurers’ actual losses because it improperly

included payments for non-injection treatments unrelated to the Sharmas’

specific offenses of conviction, such as Kiran’s undisputedly legitimate allergy

practice and treatments other than by injection. 

In support of their objections, the Sharmas submitted an alternative

restitution calculation prepared by a forensic accountant. According to her

report, their accountant first scrutinized the insurers’ claimed losses to exclude

payments for procedures other than injections, reducing the total loss to

$37,670,826.32. The accountant then assumed that the Sharmas had

administered a specific number of legitimate, medically necessary trigger-point

injections each month and that the insurers would have paid for those

procedures without the “upcoding.” Applying a credit for those injections, the

accountant concluded that the actual loss to the insurers totaled $21,028,963.61.

At sentencing, the district court heard arguments regarding the amount

of restitution and the Sharmas’ entitlement to credit for the medical services

actually provided. The district court overruled the Sharmas’ objections and

ordered restitution in the amount of $43,318,170.93, the exact amount

recommended in the PSRs.

The Sharmas timely appealed, challenging the amount of restitution

ordered by the district court. In addition, Arun contends that the government

breached the plea agreement by pursuing forfeiture of particular assets and by

opposing a credit to the restitution award for legitimate charges.

3

 Case: 11-20102 Document: 00512091609 Page: 3 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

II. Analysis

A. Standards of Review

We review the quantum of an award of restitution for abuse of discretion.2

We review the district court’s factual findings for clear error. A factual finding 3

is clearly erroneous only if “based on the record as a whole, we are left with the

definite and firm conviction that a mistake has been committed.” We may 4

affirm in the absence of express findings “if the record provides an adequate

basis to support the restitution order.”5

As Arun did not articulate breach of the plea agreement to the district

court, we review that claim for plain error. To show plain error, he must

6

demonstrate that the error was clear or obvious and affected his substantial

rights. “Even if he meets this tough standard, we will not reverse unless the 7

error has a serious effect on the fairness, integrity, or public reputation of

judicial proceedings.”8

B. Restitution

The district court awarded restitution pursuant to the Mandatory Victim

Restitution Act (“MVRA”).

9 The MVRA authorizes restitution to a victim

See United States v. Mann, 493 F.3d 484, 498 (5th Cir. 2007). 

2

United States v. Beydoun, 469 F.3d 102, 107 (5th Cir. 2006).

3

E.g., United States v. Teel, 691 F.3d 578, 585 (5th Cir. 2012) (internal quotation marks 4

omitted).

United States v. Blocker, 104 F.3d 720, 737 (5th Cir. 1997).

5

See United States v. Hebron, 684 F.3d 554, 557-58 (5th Cir. 2012) (“[W]ithout a specific 6

objection alerting the district court that the government has breached the plea agreement, the

error is not preserved.”).

E.g., United States v. Barlow, 568 F.3d 215, 219 (5th Cir. 2009).

7

Id. (internal quotation marks omitted).

8

 18 U.S.C. § 3663A. 9

4

 Case: 11-20102 Document: 00512091609 Page: 4 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

“directly and proximately harmed” by a defendant’s offense of conviction. The 10

purpose of restitution under the MVRA is to compensate victims for losses, not

to punish defendants for ill-gotten gains. An award of restitution greater than 11

a victim’s actual loss exceeds the MVRA’s statutory maximum.12

The Sharmas contend on appeal, as they did in the district court, that the

total restitution awarded exceeded the aggregate amount of the insurers’ actual

loss by erroneously (1) including restitution for payments not related to the

injection-billing fraud and (2) failing to give credit for amounts that the insurers

would have paid for the less expensive injections that were actually

administered. We address each of the contentions in turn.

1. Actual Loss Caused by the Offenses of Conviction

The MVRA limits restitution to the actual loss directly and proximately

caused by the defendant’s offense of conviction. An award of restitution cannot

compensate a victim for losses caused by conduct not charged in the indictment

or specified in a guilty plea, or for losses caused by conduct that falls outside 13

the temporal scope of the acts of conviction. Moreover, excessive restitution 14

18 U.S.C. § 3663A(a)(1), (a)(2), (c)(1); see also United States v. Arledge, 553 F.3d 881, 10

898 (5th Cir. 2008).

See Beydoun, 469 F.3d at 108; see also United States v. Taylor, 582 F.3d 558, 565-66 11

(5th Cir. 2009).

See Chem. & Metal Indus., 677 F.3d at 752; Beydoun, 469 F.3d at 107.

12

See United States v. Hinojosa, 484 F.3d 337, 343 (5th Cir. 2007) (vacating order of 13

restitution that included losses caused by uncharged fraud that was “outside the scope of the

indictment and inconsistent with the understanding of the parties to the oral plea”).

See United States v. Inman, 411 F.3d 591, 595 (5th Cir. 2005) (vacating excessive 14

restitution award that included losses falling outside the “specific temporal scope of the

indictment”) (emphasis in original).

5

 Case: 11-20102 Document: 00512091609 Page: 5 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

awards cannot be excused by harmless error; every dollar must be supported by

record evidence. 

15

The Sharmas insist that the district court erred by awarding restitution

for losses not caused by their offenses of conviction. They pleaded guilty to only

two of the sixty-four counts of indictment, and both of those counts related to the

scheme to bill insurers between 1998 and 2009 for facet-point injections that

were never administered. Amounts that the insurers paid the Sharmas between

1998 and 2009 for those non-administered injections are actual losses properly

compensable through restitution. Not so, however, for amounts paid by the

insurers before 1998 or paid by them between 1998 and 2009 for unrelated

treatments. Those payments do not constitute losses directly and proximately

caused by the offenses of conviction and should not have been included in

calculating the restitution award.

The district court adopted the precise amount from the PSRs, which it

could do only if those amounts had an adequate evidentiary basis and remained

unrebutted by the defendants. In preparing the Sharmas’ PSRs, the Probation 16

Office apparently relied on statements from the insurers themselves. The

government solicited information regarding “any financial losses and/or harm

experienced as a result of” the Sharmas’ billing for injections that were not

administered. Medicare, Medicaid, and thirty of the private insurers responded

with “victim impact statements” claiming losses from the fraud. For Medicare,

Medicaid, and twenty-eight of the thirty defrauded private insurers, the

Probation Office copied the claimed losses directly into the PSRs. 

17

See Arledge, 553 F.3d at 899 (vacating restitution award because less than 1% of the 15

total was not supported by evidence of causation by fraud).

See United States v. Cantu-Ramirez, 669 F.3d 619, 629 (5th Cir. 2012).

16

For the remaining two insurers, the PSRs recommended different amounts than the 17

losses claimed in the victim impact statement, but the record is silent as to this discrepancy.

6

 Case: 11-20102 Document: 00512091609 Page: 6 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

By thus directly incorporating the amounts from the victim impact

statements into the PSRs as actual losses, the Probation Office went astray. 

Examples from three of the insurers will suffice to show how the Probation

Office failed to scrutinize those amounts and thereby recommended restitution

for more than the insurers’ actual losses. One insurer, Tricare, claimed as loss

all of its payments to the Sharmas dating back to 1997. Inasmuch as the

charged conspiracy did not begin until 1998,however, the 1997 payments plainly

do not constitute actual losses under the MVRA. A second insurer, Texas 18

Amerigroup, reported that it paid the Sharmas $650,775.01 for injections, out

of a total of $929,884.55 paid to them for all treatments. Yet the Probation

Office listed the larger figure, the one for total payments, as actual loss instead

of listing only the lesser amount that the insurer paid for injections. This too

overstates the insurer’s loss by including payments not caused by the specific

convictions. A third insurer, Principal Life Insurance, attached a spreadsheet 19

of all of its payments to the Sharmas, but expressly stated that it was “not sure

which claims relate to the guilty plea.” The Probation Office nevertheless

reported all of those payments as actual loss. We find no independent basis in

the record on which the PSRs could have concluded that the entire amount

related to the guilty pleas when the insurer itself stated that it did not know.20

These three errors in confecting the PSRs resulted in recommendations of

restitution to Tricare, Texas Amerigroup, and Principal Life that exceeded the

evidence of their actual losses under the MVRA. Moreover, these obvious

mistakes undermine our confidence that the Probation Office gave any

meaningful scrutiny to the actual losses of Medicare, Medicaid, and the

See Inman, 411 F.3d at 595.

18

See Hinojosa, 484 F.3d at 343.

19

See Arledge, 553 F.3d at 898-99. 20

7

 Case: 11-20102 Document: 00512091609 Page: 7 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

remaining twenty-seven private insurer victims. Our doubts are compounded 21

by the Sharmas’ rebuttal evidence. Their accountant examined the insurers’

claimed losses and concluded that, by failing to exclude non-injection payments,

the PSRs overstated the loss by $5,647,344.61.

In sum, the record does not support the entire $43,318,170.93 of

restitution recommended in the PSRs and awarded by the district court. The

Sharmas identified this deficiency to the district court, but it did not address

those objections and instead adopted the unsupported figure. This was an abuse

of discretion.22

2. Credit for Medical Services Actually Provided

Actual loss also must not include compensation for that which would have

occurred in the absence of the crime. Thus, in health-care fraud cases, an

insurer’s actual loss for restitution purposes must not include any amount that

the insurer would have paid had the defendant not committed the fraud. For

example, in United States v. Klein, the defendant physician was convicted of

billing insurers for personally administering three shots to his patients, when

in fact each patient self-administered two of the three shots at home. The 23

district court awarded restitution in the entire amount that the insurers paid the

To be clear, we are not criticizing the use of victim impact statements. The 21

government may properly solicit them, and the district court may rely on them as an

evidentiary basis for an award of restitution that complies with the standards of the MVRA. 

But if a dispute arises, the court must determine by a preponderance of the evidence whether

the statements actually support the quantum of an award of restitution. The error here was

the unquestioning reliance on the statements, first by Probation and second by the sentencing

court.

“‘[A]buse of discretion’ is a phrase which ‘sounds worse than it really is.’” Smith Int’l, 22

Inc. v. Tex. Commerce Bank, 844 F.2d 1193, 1199 n.3 (5th Cir. 1988) (citation omitted). “It is

simply a legal term of art which, properly understood, carries no pejorative connotations of a

professional or personal nature.” Id.; see also Sam’s Style Shop v. Cosmos Broad. Corp., 694

F.2d 998, 1007 n.21 (5th Cir. 1982) (“The term ‘abuse of discretion’ is unfortunate, for it has

no pejorative content.”).

 543 F.3d 206, 208-09 (5th Cir. 2008).

23

8

 Case: 11-20102 Document: 00512091609 Page: 8 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

defendant for the two self-administered shots, including the cost of the

medication itself as well as the amount the defendant charged for administering

it. But this overstated the insurers’ losses: Even though the doctor 24

fraudulently misrepresented how the medication was administered, “the

insurance companies would have had to pay for the medications regardless of the

fraud.” We therefore vacated the restitution award and remanded for 25

recalculation with a credit for the value of the medication.26

In contrast, no credit was warranted in United States v. Jones when the

defendants billed Medicare for providing physical rehabilitation services, but

fraudulently misrepresented the qualifications of the personnel who performed

the work. The district court awarded restitution to Medicare for the total 27

amount it paid to the defendants, without giving any credit for the value of the

physical therapy that was actually provided. We affirmed because, although 28

the patients may have received some therapeutic benefit, Medicare itself–not the

patients–was the victim of the fraud and would not have paid for any of the

treatment absent those fraudulent misrepresentations.29

In the instant case, the parties dispute whether this situation is closer to

Klein or to Jones. The Sharmas assert that, like the defendant in Klein, they

provided real medical services for which the insurers would have paid in the

Id. at 215.

24

Id. 25

Id. at 213, 215-16. 26

 664 F.3d 966, 970, 977 (5th Cir. 2011).

27

See id. at 972-73, 984.

28

Id. at 984. Jones discussed the applicability of a credit in the context of actual loss

29

calculation for sentencing purposes under the Guidelines, but the reasoning applies equally

to restitution, which the court awarded in the same amount. See id. at 972-73, 984.

9

 Case: 11-20102 Document: 00512091609 Page: 9 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

absence of the fraudulent upcoding. The government contends that this case 30

is closer to Jones because, notwithstanding any pain relief that the patients

might have received, nothing in the record suggests that the insurers would have

paid for the medically unnecessary trigger-point injections.

Even though the MVRA puts the burden on the government to

demonstrate the amount of a victim’s loss, a sentencing court may shift “the

burden of demonstrating such other matters as the court deems appropriate ...

[to] the party designated by the court as justice requires.” In the past, we have 31

approved the transfer of at least a portion of the burden to a defendant to

establish his entitlement to a restitution credit. In United States v. Loe, for

example, we affirmed a district court’s rejection of a restitution credit on the

basis of the defendant’s inability “to provide reliable evidence supporting its

claims” that not all of its insurance claims were fraudulent. Similarly, in 32

United States v. Sheinbaum, we stated that the defendant had “the burden of

proving an offset” to restitution for any amounts it paid the victim in a civil

settlement. And, in the unpublished opinion of United States v. Edet, another 33

health-care fraud case, we affirmed a restitution award that did not credit the

value of wheelchairs actually provided to patients because the defendant did not

offer any evidence that Medicare would have paid for the wheelchairs in the

absence of the fraud. With that precedent in mind, we examine the instant

34

record.

The Sharmas acknowledge that they are not entitled to credit for “phantom” bills 30

based on nonexistent visits.

 18 U.S.C. § 3664(e). 31

 248 F.3d 449, 470 (5th Cir. 2001). 32

 136 F.3d 443, 449 (5th Cir. 1998). 

33

 No. 08-10287, 2009 WL 552123, at *3 (5th Cir. Mar. 5, 2009). 34

10

 Case: 11-20102 Document: 00512091609 Page: 10 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

The government presented unrebutted evidence that Arun (1) deliberately

misdiagnosed patients as having rheumatoid arthritis and put them on an

injection regimen, (2) tried to convince all of his patients to have trigger-point

injections at every visit, (3) required patients who declined injections to sign

mendacious acknowledgments that they had received the treatments before he

would prescribe pain medication, and (4) administered injections in an assemblyline fashion without taking routine sanitary precautions. The Sharmas also 35

employed six foreign medical graduates to fabricate bills en masse. Finally, the

government asserted in its sentencing memorandum that patients who later

wentto different physicians were “universally” taken off trigger-point injections. 

The Sharmas offered little in the way of concrete evidence to rebut the

government’s contentions. Their plea agreements stated that some injections

were provided, but did not represent that those injections were medically 

necessary or that the physicians would have been reimbursed for them by the

insurers. Although the Sharmas provided anecdotal statements from patients

claiming some degree of pain relief, the victims of the crimes of conviction were

the insurance companies, not the patients. The Sharmas did not produce 36

competent evidence suggesting that even one injection to even one patient was

medically necessary and met the insurer’s reimbursement standards. Instead,

they submitted only the accountant’s report which assumed without explanation

that legitimate and medically necessary injections were performed and would

have been reimbursed. The district court was not required to accept that selfserving premise.

Our decision is limited to these facts. Under other circumstances, the government’s

35

burden of proving loss might require expert testimony regarding medical necessity or billing

standards.

See Jones, 664 F.3d at 984. 

36

11

 Case: 11-20102 Document: 00512091609 Page: 11 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

Our review of the record in the context of the burdens of proof satisfies us

that the government provided sufficient evidence that the trigger-point

injections were merely a revenue stream for the Sharmas and not legitimate,

medically necessary treatments for which the insurers would have paid in the

absence of the fraud. The Sharmas did not submit evidence refuting that

conclusion. Accordingly, the district court did not abuse its discretion in

declining to apply a restitution credit. 

C. Breach of the Plea Agreement

Arun also contends that the government breached his plea agreement by

(1) opposing the restitution credit discussed above, (2) requesting forfeiture of

the remainder of the educational trust, and (3) requesting forfeiture of funds not

listed in the indictment or in notices of forfeiture. “In evaluating whether a plea

agreement was breached, we apply general principles of contract law, construing

the terms strictly against the government as drafter, to determine whether the

government’s conduct is consistent with the defendant’s reasonable

understanding of the agreement.”37

Assuming without deciding that Arun adequately briefed this issue, none

of the purported breaches are inconsistent with a reasonable understanding of

the plea agreement. First, the agreement did not stipulate to a method for

calculating restitution or to a credit for any trigger-point injections. In fact, the 38

government expressly reserved the right to “set forth or dispute sentencing

factors or facts material to sentencing.” Second, the plea agreement did not

address the balance of the $1.5 million educational trust. As the trust contained

seized funds, and Arun agreed to forfeit proceeds of the fraud, he could not

reasonably expect any remainder of the trust to revert to him. Third, although

Hebron, 684 F.3d at 558 (internal quotation marks and citation omitted).

37

See id. at 557-58 (finding that Government breached a plea agreement containing an 38

express agreement as to the range of loss).

12

 Case: 11-20102 Document: 00512091609 Page: 12 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

the plea agreement stated that particular properties listed in the indictment and

in forfeiture notices were subject to forfeiture, it did not limit forfeiture to those

listed items or accounts. Rather, Arun agreed categorically “to forfeit whatever

interest [he] has in assets related to this case.” The government did not breach

the plea agreement.

III. Conclusion

The evidence is not sufficient to support the district court’s entire

$43,318,170.93 restitution award. The Sharmas both identified these

deficiencies and provided rebuttal evidence confirming that the PSRs’

recommended restitution amount exceeded the insurers’ actual losses by millions

of dollars. Thus, the district court abused its discretion as a matter of law in

awarding the entire amount recommended in the PSRs. The district court did

not, however, abuse its discretion in declining to allow the Sharmas credit for

injections that were not shown to be medically necessary or reimbursable by the

insurers. 

Accordingly, we vacate the order of restitution and remand for

recalculation consistent with this opinion and based solely on evidence already

in the record. On remand, the district court must specify, on the record, its 39

findings and reasons regarding each insurer’s actual loss. And, as the Sharmas’ 

plea agreements stipulated to a forfeiture money judgment in the same amount

as the restitution award, we also vacate the amount of the forfeiture award and

remand for recalculation. Finally, the government did not breach the plea 40

agreements with the Sharmas.

See Arledge, 553 F.3d at 899 (vacating order of restitution and remanding “for a

39

recalculation of actual loss based upon the evidence in the record”); Beydoun, 469 F.3d at 108

(remanding “to the district court to re-analyze the government’s evidence” and to recalculate

restitution).

 Our holding has no effect on any other forfeiture sought by the government. 40

13

 Case: 11-20102 Document: 00512091609 Page: 13 Date Filed: 12/20/2012
11-20102, 11-20167, 11-20204

In summary, we vacate the district court’s order of restitution and order

of forfeiture, and we remand this matter to that court for it to recalculate those

amounts in a manner consistent with this opinion.

VACATED and REMANDED with instructions.

14

 Case: 11-20102 Document: 00512091609 Page: 14 Date Filed: 12/20/2012