Opinion ID: 2779689
Heading Depth: 2
Heading Rank: 4

Heading: Sophisticated-Means Increase

Text: For the first time on appeal, defendants Huarte and Alalu argue that the district court erred in applying a two-level increase under § 2B1.1(b)(9)(C) 63 Case: 12-16056 Date Filed: 02/17/2015 Page: 64 of 85 because their offenses involved sophisticated means. They assert their individual actions in the health care fraud were not sophisticated. We review objections to sentencing issues not raised in the district court for plain error. United States v. Rodriguez, 751 F.3d 1244, 1257 (11th Cir. 2014). Section 2B1.1(b)(9)(C) of the guidelines prescribes a two-level increase where the offense involves sophisticated means. U.S.S.G. § 2B1.1(b)(9)(C). “Sophisticated means” refers to “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense,” and ordinarily includes conduct such as hiding assets or transactions through the use of fictitious entities, corporate shells, or offshore financial accounts. Id. § 2B1.1 cmt. n.8(B). In evaluating whether a defendant qualifies for the increase, the proper focus is on the offense conduct as a whole, not on each individual step. See Barrington, 648 F.3d at 1199 (“Each action by a defendant need not be sophisticated in order to support this enhancement.”). Defendant Huarte cannot demonstrate error, plain or otherwise. Her offense conduct as a whole involved a complex scheme to defraud Medicare and to conceal the fraud. The offense involved the widespread use of kickbacks, the falsification of group therapy notes, and the laundering of proceeds from the fraud. Huarte’s billing and payroll actions alone facilitated and contributed significantly to the fraud. 64 Case: 12-16056 Date Filed: 02/17/2015 Page: 65 of 85 So, too, with defendant Alalu. Though not charged in the money laundering counts of the indictment like defendant Huarte, sophisticated means were employed, both by Alalu and his co-conspirators, in implementing the health care fraud and kickback conspiracies. The individual actions of defendants Huarte and Alalu, regardless of their sophistication, are irrelevant to the application of the increase. See Barrington, 648 F.3d at 1199. E. Conscious or Reckless Risk of Death or Serious Bodily Injury Antonio Macli, Jorge Macli, and Huarte also challenge the two-level increases to their respective offense levels under § 2B1.1(b)(13)(A) because the offense involved the conscious or reckless risk of death or serious bodily injury. 19 They argue no patients died at Biscayne Milieu or suffered a serious bodily injury. The guidelines provide for a two-level increase if the offense involved “the conscious or reckless risk of death or serious bodily injury.” U.S.S.G. § 2B1.1(b)(13)(A). Even if there is no evidence of death or serious bodily injury, the increase may nevertheless be appropriate, because the increase focuses on the defendant’s disregard of risk, rather than on the result. Mateos, 623 F.3d at 1371. The district court did not clearly err by finding these three defendants placed the Medicare beneficiaries at risk of death or serious bodily injury. 19 This two-level increase for risk of death or bodily injury was not applied to defendant Alalu, the clinical director, nor to defendants Alexander and Roberts, the patient recruiters. 65 Case: 12-16056 Date Filed: 02/17/2015 Page: 66 of 85 Biscayne Milieu admitted elderly patients with dementia, although the facility and staff were not equipped to meet the elderly patients’ needs. Moreover, the elderly patients with dementia were placed in a population that consisted mostly of chronic substance abusers. Biscayne Milieu also failed to treat the substanceabuse issues in a meaningful way; dangerous drug relapses plagued much of the improperly treated substance-abusing patient population. By knowingly failing to provide necessary treatment to patients, the appellants placed the patients at risk of death or serious bodily injury. At sentencing, the district court specifically addressed the risk of death or bodily injury increase, relying on trial testimony as to the “devastating” consequences of drug addiction when “not properly treated.” Acknowledging that there was no evidence that any individual died specifically from the treatment at Biscayne Milieu, the district court nonetheless applied the increase to defendants Antonio Macli, Jorge Macli, and Huarte based on the evidence of “admission after admission after admission” that showed the defendants were creating the “reckless risk” of dangerous outcomes for the patients. The district court did not err, much less clearly err, in applying this twolevel increase. 66 Case: 12-16056 Date Filed: 02/17/2015 Page: 67 of 85 F. Vulnerable-Victim Adjustment Defendants Antonio Macli, Jorge Macli, and Huarte challenge the increase to their sentences for targeting vulnerable victims. Defendant Huarte argues the two-level vulnerable-victim adjustment under § 3A1.1(b)(1) does not apply to her because she had no contact with patients. Defendants Antonio Macli and Jorge Macli argue the only victim of the offense was the United States (Medicare) and the United States cannot be a vulnerable victim. A two-level increase applies where a defendant knew, or should have known, that a victim of the offense was a vulnerable victim. U.S.S.G. § 3A1.1(b)(1). Another two-level increase applies if the offense involved a large number of vulnerable victims. Id. § 3A1.1(b)(2). A “vulnerable victim” is a person “who is a victim of the offense of conviction,” and “who is unusually vulnerable due to age, physical or mental condition, or who is otherwise particularly susceptible to the criminal conduct.” Id. § 3A1.1, cmt. n.2. The increase applies when a defendant selected his victim to take advantage of that victim’s perceived susceptibility to the offense. Bradley, 644 F.3d at 1288. Neither bodily injury nor financial loss is required for an individual to qualify as a victim. Id. at 1288 & n.128. Defendants Antonio Macli and Jorge Macli’s argument that Medicare was the only victim of this fraud scheme fails. Although Medicare was the primary 67 Case: 12-16056 Date Filed: 02/17/2015 Page: 68 of 85 victim, elderly patients and substance-abuse patients at Biscayne Milieu also were victims of the offense. Elderly patients with dementia were transported daily from their assisted living facilities to Biscayne Milieu, which was not equipped to address their care during the day. Biscayne Milieu never treated other patients’ substance-abuse issues in a meaningful manner. The substance abusers, many of who suffered regular relapses, were vulnerable because of their need for treatment. Moreover, many of these patients had little income and depended upon housing provided by Biscayne Milieu’s patient recruiters or affiliates. Housing was often conditioned on their attendance at Biscayne Milieu. These patients were vulnerable because of their need for particular treatment and care that they could not receive at Biscayne Milieu. Defendants Antonio Macli, Jorge Macli, and Huarte knew about these patients and the lack of meaningful treatment. Moreover, these defendants and their co-conspirators targeted the Medicare beneficiaries in order to further the fraudulent activity. Accordingly, the district court did not clearly err in applying a two-level increase for vulnerable victims under § 3A1.1(b)(1). None of the appellants have challenged the number of vulnerable victims, and, thus, the additional two-level increase under § 3A1.1(b)(2) also applies. 68 Case: 12-16056 Date Filed: 02/17/2015 Page: 69 of 85 G. Aggravated Role in the Offense Defendant Antonio Macli argues he should not have received a four-level increase under § 3B1.1(a) based on the district court’s finding that he was an organizer or leader of extensive criminal activity. 20 We review a defendant’s role in the offense under § 3B1.1 only for clear error. United States v. Ramirez, 426 F.3d 1344, 1355 (11th Cir. 2005). For a factual finding to be clearly erroneous, we must be left with a definite and firm conviction that a mistake has been committed. United States v. Rodriguez-Lopez, 363 F.3d 1134, 1137 (11th Cir. 2004). Section 3B1.1(a) of the guidelines provides for a four-level increase if the defendant was an “organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” U.S.S.G. § 3B1.1(a). The defendant must have been the organizer or leader of at least one participant. Id. § 3B1.1 cmt. n.2. A participant is defined as “a person who is criminally responsible for the commission of the offense,” but the person “need not have been convicted.” Id. § 3B1.1 cmt. n.1. Factors to be considered include the exercise of decision-making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a 20 Alalu similarly argues he should not have received a three-level increase for his aggravated role in the offense. We note, however, that the district court sustained Alalu’s objection to that increase and we need not address that issue. Alalu does, however, ask for a minor role reduction, which we address separately. 69 Case: 12-16056 Date Filed: 02/17/2015 Page: 70 of 85 larger share of the fruits of the crime, the degree of participation in planning the offense, the nature and scope of illegal activity, and the degree of control and authority exercised over others. Id. § 3B1.1 cmt. n.4. Here, the district court did not clearly err by finding defendant Antonio Macli was an organizer or leader of the conspiracy to commit health care fraud. As discussed above, defendant Antonio Macli incorporated Biscayne Milieu and was its CEO. He served as Biscayne Milieu’s primary contact with Medicare for purposes of provider certification. He paid kickbacks to patient recruiters, directed recruiters to create fraudulent invoices, and instructed recruiters to recruit Haitian patients who were not eligible for PHP treatment. He also incorporated numerous other business entities in Florida and opened multiple bank accounts through which he moved the proceeds of the health care fraud. Based on the voluminous record from the seven-week trial, the district court did not err by applying the four-level upward increase for defendant Antonio Macli’s role in the offense. H. Minor-Role Reduction Defendants Alalu, Alexander, and Roberts all argue they should have received a reduction to their offense levels for playing a minor role in the offense. 70 Case: 12-16056 Date Filed: 02/17/2015 Page: 71 of 85 We review for clear error a district court’s denial of a role reduction. United States v. Bernal-Benitez, 594 F.3d 1303, 1320 (11th Cir. 2010). A defendant bears the burden of proving his minor role by a preponderance of the evidence. Id. When an offense is committed by more than one participant, a role reduction under § 3B1.2 may apply, and a defendant may receive a two-level decrease if his role was minor. U.S.S.G. § 3B1.2 & cmt. n.2. This reduction is only available “for a defendant who plays a part in committing the offense that makes him substantially less culpable than the average participant.” Id. § 3B1.2 cmt. n.3(A). A “minor participant” means any participant “who is less culpable than most other participants, but whose role could not be described as minimal.” Id. § 3B1.2 cmt. n.5. In determining whether a minor-role adjustment applies, the district court should consider, first, the defendant’s role in the relevant conduct for which he has been held accountable at sentencing, and, second, his role as compared to that of other participants in his relevant conduct. United States v. Rodriguez De Varon, 175 F.3d 930, 940 (11th Cir. 1999) (en banc). As to the first prong of this analysis, “[o]nly if the defendant can establish that [he] played a relatively minor role in the conduct for which [he] has already been held accountable—not a minor role in any larger criminal conspiracy—should the district court grant a downward adjustment for minor role in the offense.” Id. at 944. As to the second prong, the district court 71 Case: 12-16056 Date Filed: 02/17/2015 Page: 72 of 85 should look at other participants only to the extent that they (1) are identifiable or discernable from the evidence, and (2) were involved in the relevant conduct attributed to the defendant. Id. “The conduct of participants in any larger criminal conspiracy is irrelevant.” Id. Thus, in order to satisfy the second prong, the defendant must show that he was less culpable than most other participants in his relevant conduct. Id. The district court did not clearly err by declining defendants Alalu, Alexander, and Roberts’s requests for a two-level reduction for a minor role. Alalu played a significant role in the health care fraud by, as discussed above, falsifying group therapy notes, directing others to falsify notes, and instructing staff to make it appear as though certain patients were eligible for PHP treatment. Though Alalu may have been less culpable in the overall health care fraud than, for example, the Maclis, he was not less culpable than most other participants in the relevant conduct, particularly during the period he, as Biscayne Milieu’s clinical director, directed and managed other therapists at Biscayne Milieu. Defendants Alexander and Roberts’s conduct was also central to the kickback scheme. Absent active recruitment of Medicare patients, Biscayne Milieu would have been unable to bill Medicare for those beneficiaries. Although both defendants contend their roles were minor compared to the members of the overall conspiracy, the conduct of the participants in the larger criminal conspiracy 72 Case: 12-16056 Date Filed: 02/17/2015 Page: 73 of 85 is irrelevant to Alexander’s and Roberts’s roles in the kickback scheme, outlined earlier in this opinion. See Rodriguez De Varon, 175 F.3d at 944. Although Alexander received fewer kickback payments than several other recruiters, Alexander nevertheless recruited numerous patients and received $47,500 in kickbacks. Like many of the other recruiters, he was paid $30 per patient, per day of the patient’s attendance, and he submitted fraudulent invoices to reflect a fraudulent $50 per hour pay rate for case management services, a job for which he had no training or experience. Likewise, Roberts recruited numerous patients and received over $199,000 in kickbacks. Notably, the $4,866,100 that Medicare was billed for Roberts’s clients was significantly higher than the amounts Medicare was billed for any other recruiter’s clients. Accordingly, defendants Alexander and Roberts did not play minor roles and the district court did not err in denying a role reduction.