Court Opinion

ID: 618290
Source: CourtListenerOpinion
Date Created: 2011-12-06 01:01:28+00
Date Added: 2024-06-11T17:50:44.149086
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 10-7579

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

BRIAN CONNER,

                Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. Louise W. Flanagan,
Chief District Judge. (4:04-cr-00027-FL-2; 4:09-cv-00096-FL)

Argued:   October 25, 2011                 Decided:   December 5, 2011

Before TRAXLER, Chief Judge, and WILKINSON and WYNN, Circuit
Judges.

Affirmed by unpublished per curiam opinion.

ARGUED:   Milton Gordon Widenhouse, Jr., RUDOLF, WIDENHOUSE &
FIALKO, Chapel Hill, North Carolina, for Appellant.    Edward D.
Gray, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee. ON BRIEF: George E. B. Holding, United
States Attorney, Jennifer P. May-Parker, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

       Brian Conner appeals a district court order denying his

motion for relief under 28 U.S.C. § 2255 based on his claim that

he    received    ineffective       assistance       of    counsel      at       sentencing.

Finding no reversible error, we affirm.

                                            I.

       In 1990, Conner, a certified emergency medical technician,

became    the    owner,       operator,      and     president        of        Convalescent

Transports, Inc. (“CTI”).               The North Carolina corporation was in

the      business        of      providing         ambulance          and        wheelchair

transportation         services     for,    among        others,      medical        patients

covered by Medicare and Medicaid.                    Both Medicare and Medicaid

have explicit regulations concerning the conditions under which

they    will    provide       reimbursement      for      ambulance        transportation

services.        The    regulations        essentially      require         a    showing    of

medical necessity.

       Sometime after October 1991, Conner began submitting false

claims    to    Medicare      and   Medicaid       for    ambulance        transportation

services that CTI rendered.                 Employees were told to transport

all    dialysis        patients     by      ambulance,          and    employees        were

instructed      to   falsify      the    ambulance       call    reports        to   make   it

appear that transportation by ambulance was medically necessary.

                                             2
     On    the    basis     of    this          conduct,       Conner       was        charged      by

superseding indictment with 350 counts of health care fraud,

conspiracy to commit health care fraud, and obstruction of the

criminal    investigation         of    health         care     fraud.           See    18       U.S.C.

§§ 371, 1347, 1518.          The district court dismissed four counts on

the government’s motion, and the case proceeded to trial.                                            A

jury found Conner guilty of all remaining counts.

     After    the      convictions,         a    presentence             report    (“PSR”)          was

prepared.         It     included       a       recommendation             for     a     two-level

enhancement      for      abuse    of       a        position       of     trust,       see       U.S.

Sentencing       Guidelines       Manual             § 3B1.3        (2005),       and        a     loss

determination       of     more    than         $2,500,000           but     not       more       than

$7,000,000, which would have resulted in an 18-level enhancement

to   the      applicable          base          offense         level,           see         U.S.S.G.

§ 2B1.1(b)(1)(J).             Conner             objected           to     both         of       these

enhancements.

     At    Conner’s       sentencing        hearing,          the    government          presented

detailed testimony concerning the loss amount.                                   The government

showed that CTI had received $6,822,690.54 between 1997 and 2002

in reimbursements on 35,328 claims for non-emergency dialysis

transports.         The     government           determined          how      much      of       these

payments     constituted      the       government’s            loss       by     sampling         and

extrapolation.         In this regard, “RAT-STATS,” a computer program

developed by the United States Health and Human Services’ Office

                                                 3
of Inspector General, was used to perform three different steps:

(1) determining the sample size needed to represent the data;

(2) randomly generating the list of particular claims to review

as part of the sample; and (3) extrapolating from the reviewed

claims.    The first two steps produced a sample of 230 of the

claims paid to CTI for transportation of patients in connection

with dialysis.     Government agents then attempted to retrieve the

records corresponding to these claims but were only able to find

documentation for 165 of them.            These records were, in turn,

reviewed by a medical fraud investigator.

      Treating the 65 claims with no documentation (“the missing-

records claims”) as invalid, the investigator testified that of

the 230 claims, only 14 were justified by medical necessity, and

the average overpayment was $188.03 per claim.           Multiplying the

per-claim average by the total number of claims (35,328) yielded

a total overpayment of $6,642,582 for the 230 claims.            Based on

this amount, the government’s statistics expert, Suzanne Moody,

testified that RAT-STATS indicated that, with a 90% confidence

interval, the range of overpayment was between $6,330,298 and

$6,954.866.   Moody also testified alternatively that if the 65

missing-records claims were treated as fully valid, the lower

end of the overpayment range would drop to $3,738,866.

      G. Christopher Kelly, who represented Conner at trial and

at   sentencing,   raised   several   objections   to   the   government’s

                                      4
loss    amount,     including     arguments      that    the   calculations     were

partly based on claims that were not part of the scheme and that

the loss amount included all payments made for non-medically-

necessary services rather than only those payments that had been

procured by fraud.          Kelly also maintained that the government’s

extrapolation        methodology    was    not    reliable      and    specifically

focused on the missing-records claims.                   Kelly questioned Moody

regarding how changing the overpayment amounts of only roughly

28% of the claims (65 out of 230) could reduce the estimated

loss amount by about 41%.            Kelly later argued to the district

court that Moody had not provided a satisfactory explanation.

       Kelly also questioned the government’s witnesses concerning

the government’s inability to locate the documentation regarding

the missing-records claims.               Kelly subsequently asserted that

the    government     had   not   exercised      due    diligence     in   trying   to

locate    the   65    missing-records         claims    and    that   this   was    an

additional reason that the government’s methodology was flawed.

Kelly added that the government had the opportunity to do more

sampling and make its estimates much more reliable and precise

but had failed to do so.            Kelly contended that the appropriate

loss amount would be the amount proven by the evidence presented

at trial, which he claimed would have been less than $30,000.

       In the end, the district court accepted the reliability of

the sampling process.           However, the court also accepted Kelly’s

                                          5
argument     that    the        government       had    failed    to    show     that    it

exercised        sufficient         diligence          in      searching       for      the

documentation       related       to   the       65    missing-records         claims    or

alternatively in reviewing substitute claims.                          In an effort to

ensure that Conner was not penalized by the government’s lack of

diligence, the court calculated the loss based on the assumption

that the 65 missing-records claims were entirely valid.                                 The

district court also agreed with Kelly that trips transporting

patients to and from hospitals were not properly included and

thus counted such claims as valid as well.                             With those two

assumptions, the court found a loss amount of $3,613,165.00,

nearly $3 million less than the government’s proposed amount.

Unfortunately for Conner, this quite substantial reduction still

left him the same loss range of more than $2.5 million and not

more than $7 million.             See U.S.S.G. § 2B1.1(b)(1)(J).                Thus, the

associated    18-level          enhancement       and    the     two-level      abuse-of-

position-of-trust enhancement, which the court also applied over

Kelly’s objection, left Conner with a total offense level of 32.

This    level,      in    conjunction        with      Conner’s    Criminal       History

Category of I, yielded a guideline range of 121 to 151 months’

imprisonment.            The    district     court      sentenced      Conner     at    the

highest point in that range.

       We affirmed Conner’s sentence on appeal, holding, as is

relevant    here,        that    the   government’s         extrapolation        provided

                                             6
adequate support for the district court’s loss determination.

See United States v. Conner, 262 F. App’x 515, 518-19 & n.5 (4th

Cir. 2008).      In so doing, we specifically rejected an argument

by Conner that the sampling process was not adequately shown to

be random.    See id. at 519 n.5.

     Conner subsequently filed a motion to vacate his judgment

or set aside his sentence pursuant to 28 U.S.C. § 2255, alleging

that Kelly was ineffective at trial and at sentencing.                    As is

relevant here, Conner alleged that Kelly was constitutionally

ineffective at sentencing in failing to offer expert testimony

to   challenge      the   government’s     statistical    evidence   and     in

failing to argue for a reduction in his loss amount for the

value    received    by    the   government    from    CTI’s   provision     of

services.

     In support of his motion, Conner offered evidence from two

expert    witnesses       who    challenged   the     reliability    of     the

government’s loss calculation methodology on a number of bases.

They contended that the sample size was too small, and that

“deleting” the 65 missing-records claims called into question

the randomness of the sample.            J.A. 96.     Conner’s experts also

pointed out additional flaws in planning, sample design, conduct

of the actual sample, data analysis, and the presentation of the

final results.

                                       7
       Conner   also   presented       an       affidavit        and    testimony      from

Joseph B. Cheshire V, an attorney who represented Conner in his

direct appeal.       Cheshire opined that Kelly should have hired an

expert to study the government’s theory of how to calculate the

loss   and    that   Kelly   should    have       tried     to    minimize       the   loss

amount by identifying benefits that the government received from

CTI’s provision of services.

       Additionally, Conner presented an affidavit and testimony

from   Keith    A.   Williams,    an   attorney        who       represented       one   of

Conner’s co-defendants.          As is relevant here, Williams opined

that Kelly was constitutionally deficient in not arguing for a

reduction in loss amount based on the value to the government of

services CTI rendered.          He also asserted that an expert “could

have provided some assistance in preparing for and presenting”

arguments at sentencing.         J.A. 278.

       The government also presented an affidavit and testimony

from Kelly.      He noted that he “had had civil cases that dealt

with [RAT-STATS] and that type of thing so [he] knew some of the

issues that could occur with those.”                  J.A. 331.             He also stated

that   he    researched   the    validity        of   the    use       of    RAT-STATS   in

federal jurisdictions.           He admitted, however, that “it would

have been helpful to have had an expert at sentencing.”                                J.A.

332.    He explained that Conner’s inability to pay for an expert

                                            8
figured in to his decision not to seek one, but he conceded that

he did not seek court appointment of an expert.

     After considering the evidence before the court, a federal

magistrate judge recommended denying each of Conner’s claims.

Conner subsequently filed objections with the district court,

but the district court overruled the objections, adopted the

magistrate’s findings and analysis, and denied the motion to

vacate.   See     Conner   v.   United    States,   Nos.   4:04-CR-27-FL-2,

4:09-CV-96-FL, 2010 WL 4484397, at *8 (E.D.N.C. Nov. 1, 2010).

The court also granted Conner a certificate of appealability.

See id.

                                    II.

     Conner first argues that Kelly was ineffective in failing

to offer expert testimony challenging the statistical and random

sampling methodology used by the government at sentencing (“the

expert claim”).    We disagree.

     In considering the denial of a § 2255 motion, we review a

district court’s factual findings from an evidentiary hearing

for clear error, and we review de novo mixed issues of law and

fact, such as whether established facts demonstrate a deficient

performance by counsel.         See United States v. Roane, 378 F.3d

382, 395 (4th Cir. 2004).

                                     9
       Claims of ineffective assistance of counsel are reviewed

under the standards of Strickland v. Washington, 466 U.S. 668

(1984), and its progeny.           To be entitled to relief, Conner must

demonstrate “that counsel’s performance was deficient” and that

“the deficient performance prejudiced the defense.”                         Id. at 687.

To demonstrate inadequate or deficient performance, Conner “must

show    that    counsel’s       representation        fell    below    an     objective

standard of reasonableness” measured by “prevailing professional

norms.”      Id. at 688.        Our application of this standard “must be

highly deferential,” and we “must indulge a strong presumption

that counsel’s conduct falls within the wide range of reasonable

professional        assistance.”      Id.      at    689.     Moreover,       counsel’s

performance must not be judged with the benefit of hindsight;

rather, we consider “counsel’s perspective at the time” of the

representation in question.              See id.       To demonstrate prejudice,

Conner “must show that there is a reasonable probability that,

but    for    counsel’s    unprofessional           errors,   the     result      of   the

proceeding would have been different.”                 Id. at 694.

       While    Strickland      applies    in   both     capital      and    noncapital

sentencing proceedings, see, e.g., Glover v. United States, 531

U.S. 198, 202-04 (2001) (applying Strickland test in noncapital

case),       what    constitutes     deficient         performance          can   differ

depending on the type of proceeding.                  The ABA’s Criminal Justice

Standards,      which     can    serve    as    a     tool    for   evaluating         the

                                          10
reasonableness         of     counsel’s        representation,           see    Wiggins       v.

Smith, 539 U.S. 510, 524 (2003), indicate that defense counsel

in     a    noncapital      sentencing         proceeding        should        (1)    promptly

investigate the circumstances and facts relevant to sentencing,

(2) present the court with any basis that will help achieve an

outcome       favorable       to     the   defense,        and     (3)     supplement         or

challenge information provided in any presentence report.                                    See

ABA Criminal Justice Standards 4-4.1(a) and 4-8.1(b).

       In    this     case,    to    fully     understand        the   district        court’s

findings, we also must consider the magistrate’s analysis of

Conner’s      claims.         The    magistrate       rejected      Conner’s         assertion

that Kelly’s representation at sentencing was constitutionally

deficient      and     concluded      that,      even     assuming       that        Kelly   was

deficient in the ways Conner alleged, Conner could not establish

a reasonable probability he would have received a more lenient

sentence had Kelly taken the steps Conner now says he should

have taken.         As relates to the expert claim, Conner objected to

the magistrate’s conclusions regarding both Strickland prongs.

Regarding the second prong, Conner maintained that if Kelly had

been able to convince the district court that the government’s

extrapolation was invalid, then the extrapolation “would have

been       required    to     be    re-done”        and   there    was     “more       than    a

reasonable      likelihood          that   a   different         sentence       would    have”

resulted.       J.A. 727.

                                               11
      The    district   court     rejected     both     of    these    arguments.

Regarding    the   second   prong,   the   court      reasoned      that   even   if

Kelly’s presentation of expert testimony would have convinced

the district court to require the government to take another

sample and redo its extrapolation, Conner made no showing that

he would have ended up with a smaller loss amount than he did

having the court assume that the 65 missing-records claims were

actually completely legitimate.         See Conner, 2010 WL 4484397, at

*5.

      In his initial brief to us, Conner challenged the district

court’s conclusion that Conner failed to establish that Kelly’s

representation was rendered deficient by his decision not to

present      expert     testimony      challenging           the      government’s

extrapolation      methodology.      However,     he    did   not     address     the

district     court’s    determination      that    he    could      not    show    a

reasonable    probability    that    redoing    the     government’s       analysis

would have led to a more lenient sentence.                    Conner addressed

this issue for the first time in his reply brief, claiming he

demonstrated prejudice because an expert could have shown that

the government’s extrapolation was flawed, and thus caused the

district court to reject it and determine the loss amount by

considering only the trial evidence, which would have supported

a loss finding of less than $30,000.

                                      12
     This prejudice argument is not properly before us for two

reasons.        First,    inherent   in       Conner’s       new   argument     is    a

contention that the district court erred in assuming that the

government would have been allowed to “redo” its statistical

analysis if the district court agreed with Kelly’s expert.                           Not

only did Conner not make this argument to the district court,

he affirmatively argued the opposite — that had Kelly employed

an expert at sentencing, the government would have been required

to redo its statistical analysis.              Accordingly, the argument is

waived.    See First Va. Banks, Inc. v. BP Exploration & Oil,

Inc., 206 F.3d 404, 407 n.1 (4th Cir. 2000) (“Because neither of

these arguments were raised below, we decline to consider them

on   appeal.”).          Additionally,    even       had     Conner    raised    this

argument   in    the   district   court,       he    would    have    waived    it    by

failing to raise it in his initial brief.                    See Cavallo v. Star

Enter., 100 F.3d 1150, 1152 n.2 (4th Cir. 1996) (“[A]n issue

first argued in a reply brief is not properly before a court of

appeals.”).

     In any event, even assuming arguendo that Conner properly

preserved a challenge to the district court’s ruling that he

could not establish prejudice from his asserted deficiency, we

agree   with    the    district   court       that    Kelly’s      performance       was

constitutionally adequate.

                                         13
     As the district court noted, Kelly was quite active during

sentencing:

     Kelly reviewed the [PSR] with [Conner], going over
     potential objections in great detail and discussing
     the calculation of loss.      Kelly made a number of
     objections to the PSR on [Conner’s] behalf, and . . .
     he zealously and effectively advocated on [Conner’s]
     behalf at sentencing, particularly relating to the
     government’s statistical sampling and its proposal to
     “deny” for loss purposes sixty-five (65) claims for
     which no medical documentation existed.

Conner, 2010 WL 4484397, at *4.        As the court explained,

     Kelly argued a number of the same points that
     [Conner’s] experts bring to the court’s attention.
     For example, Kelly argued that the government’s expert
     had not adequately explained “how the relatively minor
     change of 25 to 28% of the claims could result in an
     over 40% difference in the damage calculation.” Kelly
     argued that “[t]hat’s not the kind of precision that
     makes this study reliable.”    He also noted that the
     government “had the opportunity to make [the sampling]
     more reliable by doing a larger scope” and that they
     failed to “explain the differences and irregularities
     . . . in the results.”

Id. at *4 n.7 (citations omitted).

     Kelly was well aware that extrapolations similar to the

government’s in this case had “been upheld numerous times in the

federal courts.”    J.A. 115.     In light of that fact, it was his

judgment “that under the facts of this case, and the time and

financial   limitations   that   the    family   placed   on   [him],   that

calling an expert at sentencing would [not] have been possible

or beneficial.”    J.A. 115.

                                   14
     Based on all of these facts, we simply cannot conclude that

Conner     has    rebutted      the     “strong        presumption”         that     Kelly’s

performance       was    constitutionally          reasonable.        Strickland,          466

U.S. at 689.        By vigorously exploiting the government’s lack of

diligence in searching for the documentation for the missing-

records    claims        (and   by    challenging        the    relevance      of     claims

relating     to     transportation          to     and    from      hospitals),        Kelly

obtained    a     loss    amount     for    his    client      that   was    millions       of

dollars less than the government sought.                        Although his efforts

did not yield a guideline range lower than the government had

proposed, we conclude that his performance was within prevailing

professional norms.

     For    similar       reasons,     we    do    not    believe     that    Conner       was

prejudiced by Kelly’s decision not to call an expert.                              Even had

Kelly been able to use an expert to persuade the district court

to reject the government’s methodology, it is sheer speculation

to conclude that the ultimate result would have been a loss

determination of less than $2,500,000.

                                            III.

     Conner       also     argues     that       the     district     court        erred   in

rejecting his claim that Kelly was constitutionally ineffective

at sentencing because he did not argue that the loss amount

should be reduced by the value of benefits that the government

                                             15
received    by    virtue     of    the    provision       of    CTI’s     services    (“the

benefits received claim”).               See U.S.S.G. § 2B1.1 cmt. n.3(F)(ii)

(“In a case involving government benefits (e.g., grants, loans,

entitlement program payments), loss shall be considered to be

not less than the value of the benefits obtained by unintended

recipients       or    diverted    to     unintended       uses,     as    the    case   may

be.”); United States v. Dawkins, 202 F.3d 711, 715 (4th Cir.

2000) (“[W]e advise the district court to consider loss as the

difference       between     the    amount        of     benefits       [the     defendant]

actually received and the amount he would have received had he

truthfully and accurately completed the . . . forms.”).                                  For

example, he maintains that even with regard to claims in which

ambulance     transportation         was        not     medically       necessary,       non-

emergency transport may have been necessary, and Kelly should

have argued that Conner was entitled to a credit for the value

of such transport.

     We     cannot       conclude        that     counsel’s       representation         was

constitutionally         deficient.          As       noted,    Kelly     made    numerous

arguments disputing the government’s loss calculation, and he

indeed     achieved      a   significant          victory       in   establishing         the

government’s lack of diligence in searching for the missing-

records documentation.              As a result of his challenge to the

quality of the government’s investigation, and his arguments as

to   how    the       inclusion    of     those        claims    would     undercut      the

                                            16
reliability of the government’s extrapolation, the loss amount

was based on the assumption that the missing-records claims,

which made up more than a quarter of the entire sample, were

100%    valid.      One    need   not   be    an   expert   in   statistics    to

recognize that that change resulted in a significant reduction

of Kelly’s loss amount even if it was not enough to reduce his

guideline range.

       Our review of the record makes clear that even if there

were good arguments that Kelly did not make, there were many

good ones that he did make and indeed made effectively.                       See

Mickens v. Taylor, 240 F.3d 348, 363 (4th Cir. 2001) (en banc)

(“The Sixth Amendment guarantee of counsel does not guarantee an

ideal    or      perfect    representation.”).          Given     the   “highly

deferential” standard by which we judge counsel’s performance,

we cannot conclude that Kelly’s representation at sentencing was

constitutionally deficient.         Strickland, 466 U.S. at 689.

                                        IV.

       In sum, for the foregoing reasons, we affirm the district

court’s order denying Conner’s § 2255 motion.

                                                                        AFFIRMED

                                        17