Opinion ID: 2974509
Heading Depth: 2
Heading Rank: 1

Heading: Triana I

Text: Between 1987 and 1998, Defendant-Appellant, Triana, worked as a Doctor of Podiatric Medicine in Ohio, specializing in the treatment of elderly patients housed in nursing homes throughout the state. On September 28, 1998, Triana executed a plea agreement with the government under which he pled guilty to one count of health care fraud for inflated Medicare billing, in violation of 18 U.S.C. § 1347 (hereinafter referred to as “Triana I”). Under the terms of Triana’s plea agreement, he agreed that he would not “personally, or through any entity he controls, i.e. through a direct or indirect ownership interest of five percent or more or an officer, agent, or managing employee (as defined in 42 U.S.C. § 1320a 5(b)) submit claims or cause claims to be submitted for program payment.” Triana also reached a settlement with the United States Department of Health and Human Services (“HHS”), excluding him from participation in “Medicare, Medicaid and all other federal health care programs” for a period of eight years. According to the exclusion notice he received from HHS, Triana could receive “no program payment . . . for any items and services . . . including administrative and management services,” and such restrictions on payment would occur whether he served as an employee, administrator, operator, or in any other capacity. Pursuant to the above agreements, on January 29, 1999, the district court sentenced Triana to six months of imprisonment in Oriena House, a half-way house with work release privileges located in Akron, Ohio, to be followed by a two-year period of supervised release, pursuant to 18 U.S.C. § 3583. As a condition of Triana’s sentence, he was required to “notify [his] probation officer any time he had an interest of five percent or more in any entity or practice which submits claims or causes claims to be submitted to . . . Medicaid or Medicare reimbursement.” In addition, Triana was required to pay a fine of $10,000.00 and restitution in the amount of $83,644.00 “to be paid at a minimum rate of 15% of defendant’s gross monthly earnings.” In addition, effective June 11, 1999, the State of Ohio Medical Board permanently revoked Triana’s podiatry license. No. 05-3173 United States v. Triana Page 3 B. Triana’s Involvement in Footcare and Podiatry Admin. Because of his exclusion from Medicare and Medicaid programs, Triana was unable to obtain a Medicare or Medicaid provider number for any entity that he owned or controlled. Nonetheless, with the help of Salvagni, his corporate attorney and friend, Triana was able to create two new companies, Footcare and Podiatry Admin., and use them in a scheme that would enable him to participate, benefit from, and control a podiatry practice that billed Medicare. Although both Footcare and Podiatry Admin. were, in actuality, operated by Triana, Triana placed Dr. Stephen Castor (“Castor”) at the helm of Footcare, and made his own sister, Peck, the owner and sole shareholder of Podiatry Admin. In October 1998, Triana contracted to sell Castor his former podiatry practice under the name Footcare for $50,000.00, consisting of a $500 down payment and a promissory note for the balance of $49,500. Castor, a former bellhop at the Cleveland Airport Marriott, was a recent graduate of podiatry school who had been working for Triana without pay since early 1998 in the hopes of establishing himself as a podiatrist and eventually opening a podiatry practice in Ohio. Though Salvagni testified that the agreement between Triana and Castor was a standard-form contract, Castor’s testimony at trial made clear that Triana had arranged the deal to allow him to maintain control of the operation while having Castor serve as a figurehead. First, despite the terms of the agreement, no money changed hands. Castor never paid Triana the $500 down payment required by the agreement, and Triana told Castor that he would not have to pay Triana any money on the $49,500 promissory note. Castor’s eventual default on the note would, therefore, permit Triana to reclaim his practice at the appropriate moment. Second, Triana significantly limited Castor’s power to oversee the business. From 1998 onward, Footcare hired at least thirty new podiatrists and took on hundreds of new nursing home clients. Castor never once authorized a contract, and was at all times restricted from looking at Footcare’s books. Third, Triana ensured that Castor’s salary was limited to 30% of the net receipts from work he billed plus a 5% administrative fee. Thus, despite the fact that after Castor “purchased” the company, Footcare grew exponentially, eventually achieving gross income upwards of $650,000 in 2001, Castor’s salary was consistently under $70,000 per year. By limiting Castor’s income, Triana was able to funnel the rest of the money to his second company, Podiatry Admin., under the guise of “management costs.” Salvagni also assisted Triana in creating Podiatry Admin., an Ohio limited liability company. Podiatry Admin. received a high percentage of Footcare’s monthly gross profits, ostensibly in return for providing Footcare with both management and administrative services. In order to hide his control of the company, however, Triana recruited his younger sister, Peck, to serve as the owner and sole shareholder of the company. Peck was a recently-divorced, financially strapped elementary school teacher in Florida, who had no background in either health care or medicine. At trial, Peck testified that both Triana and Salvagni had assured her that after signing the appropriate paperwork, she would be “relieved of all responsibilities” regarding Podiatry Admin., including ever having to visit the company headquarters in Ohio. In return for permitting Triana to use her name, Peck received a $500 monthly stipend from the Podiatry Admin. account. Footcare’s podiatrists, allegedly “unaffiliated” with Triana, derived significant income from Medicare billing. The income passing from Medicare to Footcare and Podiatry Admin., was funneled to Triana in a number of ways. Because Footcare and Podiatry Admin. both maintained office space in a building owned by Triana, Podiatry Admin. credited Triana for thousands of dollars in rental expenses. Triana’s office building contained four separate and nearly identical suites, and although the two other renters testified that they paid roughly $6,000 per year in rent, Podiatry Admin.’s rent was inexplicably higher, totaling approximately $80,000 per year. Podiatry Admin. also charged Footcare considerable sums for “administration” and “management” costs; such costs usually amounted to at least 57% of Footcare’s monthly earnings. At trial, however, Podiatry Admin.’s former President, Theresa Kripinsky (“Kripinsky”), testified that despite Podiatry No. 05-3173 United States v. Triana Page 4 Admin.’s high management fees, Podiatry Admin.’s services to Footcare were actually quite limited in scope. For instance, though Podiatry Admin. charged Footcare to perform its Medicare billing, in reality, Northcoast Medical Billing Service (“North Coast”), not Podiatry Admin., submitted all of Footcare’s claims to Medicare. Kripinsky testified that Triana consistently instructed her to issue Podiatry Admin. checks to take care of his personal expenses. While serving as Podiatry Admin.’s President, Kripinsky used Podiatry Admin. checks to make Triana’s restitution payments as well as monthly mortgage payments on his two condos. Further, Kripinsky used Podiatry Admin. funds to settle a number of Triana’s bills from various stores such as Sam’s Club, Kaufman’s and Pier 1 Imports. On occasion, Triana also asked Kripinsky for blank checks from the Podiatry Admin. account to use for his own purposes. At trial, Kripinsky claimed that she quit because she was upset that between his salary and his various personal expenses, Triana consumed approximately 45% of all of Podiatry Admin.’s funds. C. Triana’s Monthly Probation Reports As a condition of his conviction in Triana I, Triana was required to cooperate with assigned United States Probation Officers and to provide them with truthful information regarding the nature of his employment and income. Though Triana argued that he was continuously truthful in completing his probation reports, at trial, the government adduced evidence suggesting that in addition to underreporting his financial assets significantly, Triana provided the probation officers with substantially inaccurate accounts of his involvement in Footcare and Podiatry Admin. For instance, though Triana told his probation officers that he was not involved with Medicare billing in any way, at trial, various witnesses testified that Triana often inquired of Footcare staff regarding claims submitted to Medicare, as well as any Medicare monies that were received. Further, in order to keep from piquing Medicare’s suspicion about Footcare’s billing procedures, Triana consistently instructed Footcare podiatrists to bill with a lower patient code whenever possible. Most shocking, when Matthew Simpson, a fraud investigator at Nationwide Insurance Company, came to Footcare’s home office to perform an audit, Triana representing himself as Castor, went through the necessary audit procedures with him, ensuring that Simpson would not learn any potentially incriminating or fraudulent information. D. The Course of Proceedings in Triana II In July 2000, the FBI began to suspect that Triana was skirting the requirements of his sentence in Triana I, as well as his settlement agreement with HHS. Hence, on March 3, 2004, after the FBI had completed a thorough investigation, a federal grand jury returned the five-count indictment for conspiracy, health care fraud, making false statements and bank fraud, currently at issue (hereinafter referred to as “Triana II”). At trial, Triana presented a proposed theory of defense jury instruction on entrapment by estoppel. Triana asserted that because there was ample evidence at trial to show that he had been forthcoming about his involvement in both Footcare and Podiatry Admin., he should not now be punished for his reliance on his USPOs’ implied ratification of his actions. The district court denied the jury instruction, finding both that there was no evidence in the record to support Triana’s claim that he had informed his USPOs that he had any interest in either Footcare or Podiatry Admin. and that Triana had been “indirectly” receiving funds from Medicare since being sentenced in Triana I. Triana was found guilty, and the government’s sentencing memorandum recommended numerous sentence enhancements from the Federal Sentencing Guidelines (the “Guidelines”), that, when combined, raised Triana’s offense level from a base level of 7 to at least a 33. The government urged the following enhancements: (1) a two-level enhancement under U.S.S.G. § 2B1.1(b)(1)(7)(C) for Triana’s violation of a prior court order; (2) a two-level enhancement under U.S.S.G. § 2B2.2(b)(8)(C) for Triana’s use of sophisticated means in concealing his involvement in Footcare No. 05-3173 United States v. Triana Page 5 and Podiatry Admin.; (3) a two-level enhancement under U.S.S.G. § 3A1.1 for Triana’s knowledge that a victim of the offense, nursing home patients, was a “vulnerable victim”; (4) a two-level enhancement under U.S.S.G. §§ 3B1.3 and 3B1.3(c) for a person who both “abuses a position of trust during the course of illegal activity” and is the “leader, manager, or supervisor of criminal activity.” Although Triana objected to each of the government’s proposed enhancements, the district court overruled his objections. The government also argued for an 18-point enhancement under U.S.S.G. § 2B1.1 for the substantial loss to Medicare caused by Triana’s fraud. The government recommended that the district court adopt the $2,922,967.90 in bills Footcare submitted to Medicare – the “intended loss” – as the loss attributable to Triana under the Guidelines. Triana objected and argued that because all of Footcare’s services were legitimate services to Medicare-eligible patients, the appropriate “loss” under U.S.S.G. § 2B1.1(a)(1) was zero. In its discretion, the district court adopted the $1,764,199.36 Footcare received from Medicare – the “actual loss” – adding 16 points to Triana’s base offense level, instead of the government’s recommended 18. Accordingly, the district court calculated Triana’s offense level to be a Level 1, Category III, and sentenced him to the following concurrent sentences: Count 1- 60 months; Count 2 - 120 months; Count 3 - 60 months; Count 4 - 135 months. The district court also ordered Triana to pay $1,764,199.6 in restitution, and to serve three years on supervised release. As set forth above, Triana now appeals his conviction and his sentencing on three bases: (1) that the district court erred in failing to allow his entrapment by estoppel jury instruction; (2) that the district court erred in calculating “loss” under the U.S.S.G. § 2B1.1; and (3) that Triana must be resentenced in light of United States v. Booker.