Court Opinion

ID: 3066139
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:59:34.309677+00
Date Added: 2024-06-11T11:25:51.028513
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                 No. 12-10045
                Plaintiff-Appellee,
                                             D.C. No.
                 v.                       2:08-cr-00427-
                                             MCE-6
ALEXANDER POPOV,
            Defendant-Appellant.

UNITED STATES OF AMERICA,                 No. 12-10553
                Plaintiff-Appellee,
                                             D.C. No.
                 v.                       2:08-cr-00427-
                                             MCE-7
RAMANATHAN PRAKASH,
           Defendant-Appellant.             OPINION

     Appeal from the United States District Court
         for the Eastern District of California
Morrison C. England, Jr., Chief District Judge, Presiding

               Argued and Submitted
     November 5, 2013—San Francisco, California

                Filed February 11, 2014
2                     UNITED STATES V. POPOV

        Before: Stephen Reinhardt and Paul J. Watford, Circuit
            Judges, and Robert S. Lasnik, District Judge.*

                      Opinion by Judge Lasnik

                           SUMMARY**

                           Criminal Law

    The panel reversed the district court’s findings regarding
the amount of loss and remanded for resentencing, in a case
in which the defendants were convicted of conspiracy to
commit health care fraud in violation of 18 U.S.C. §§ 1347
and 1349, and health care fraud in violation of 18 U.S.C.
§ 1347, arising from the submission of fraudulent bills to
Medicare.

    The defendants argued that the district court erred in
finding that the intended loss was the amount billed to
Medicare, rather than the amount Medicare actually paid.

    The panel held that in health care fraud cases, the amount
billed to an insurer shall constitute prima facie evidence of
intended loss for sentencing purposes, and if not rebutted,
shall constitute sufficient evidence to establish the intended
loss by a preponderance of the evidence, but that the parties

    *
  The Honorable Robert S. Lasnik, District Judge for the U.S. District
Court for the Western District of Washington, sitting by designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                 UNITED STATES V. POPOV                      3

may introduce additional evidence to support arguments that
the amount billed overestimates or understates the
defendant’s intent. Because the record left the panel
uncertain as to what the district court understood the law to
be, and there is evidence suggesting that the defendants may
have been aware that Medicare only pays a fixed amount, the
panel vacated the sentences and remanded for resentencing on
this issue.

    Regarding defendant Prakash’s argument that he should
not be held accountable in the loss calculation for claims
submitted to Medicare under defendant Popov’s provider
number, the panel held that the evidence in the record was
sufficient to support the district court’s finding that Popov’s
bills to Medicare were foreseeable to Prakash.

    The panel addressed other claims in a memorandum
disposition wherein the panel affirmed the district court.

                         COUNSEL

Karen L. Landau, Oakland, California, for Defendant-
Appellant Alexander Popov.

James W. Spertus, Spertus, Landes & Umhofer, LLP, Los
Angeles, California, for Defendant-Appellant Ramanathan
Prakash.

Philip A. Ferrari and Jean M. Hobler, Assistant United States
Attorneys, Office of the United States Attorney for the
Eastern District of California, Sacramento, California, for
Plaintiff-Appellee United States of America.
4                  UNITED STATES V. POPOV

                            OPINION

LASNIK, District Judge:

    Defendants-Appellants Ramanathan Prakash and
Alexander Popov were convicted of one count of conspiracy
to commit health care fraud in violation of 18 U.S.C. §§ 1347
and 1349, and three counts of health care fraud in violation of
18 U.S.C. § 1347, following a jury trial. On appeal,
Appellants challenge their sentences, arguing that the district
court erred in calculating the amount of loss for sentencing
purposes.1 We have jurisdiction pursuant to 28 U.S.C.
§ 1291. We reverse the district court’s findings regarding the
amount of loss and remand for resentencing.

                        BACKGROUND

    On May 20, 2010, Popov and Prakash were indicted,
along with nine co-defendants, on one count of conspiracy to
commit health care fraud and several counts of health care
fraud. The Superseding Indictment alleged that Appellants’
co-defendant, Vardges Egiazarian, owned and operated three
medical clinics in Northern California that submitted
fraudulent bills to Medicare for more than $5 million.

A. Medicare

    Medicare is a federally funded program that provides
limited health insurance to persons over the age of 65 and

    1
    We address Appellants’ other claims and the claims raised by Lana
LeChabrier, Appellants’ co-defendant, regarding their convictions and
sentences in a separate unpublished memorandum disposition filed
simultaneously with this opinion wherein we affirm the district court.
                 UNITED STATES V. POPOV                     5

disabled people who meet its qualifications. 42 U.S.C.
§ 1395(o). Medicare Part A covers inpatient hospital and
nursing facility care, id. § 1395c, while Part B covers
outpatient services and equipment, id. § 1395k. Medicare
coverage is limited to services that are medically “reasonable
and necessary.” Id. § 1395y(a)(1)(A). Participating
providers are required to ensure that any services rendered to
Medicare recipients are supported by sufficient evidence of
medical necessity. Id. § 1320c-5(a)(1).

    Before a provider may submit a claim for reimbursement,
he or she must apply for and obtain a Medicare provider
number for a particular clinic or hospital. Id. § 1320d-2(b);
45 C.F.R. § 162.410. Once enrolled, a Medicare service
provider may submit claims for reimbursement for covered
services. 45 C.F.R. § 424.505. Medicare may pay the claim
in whole or in part, or deny the claim in whole or in part.
Medicare assigns an allowed amount to each of its covered
services pursuant to a fixed fee schedule and pays the
provider approximately eighty percent of the allowed amount.
42 U.S.C. § 1395l(a)(1); 42 C.F.R. §§ 405.501, 410.152(b).
The provider may pursue recovery of the remaining twenty
percent of the allowed amount from the patient directly.
42 U.S.C. § 1395l(a)(1). Regardless of the amount the
provider bills Medicare, the total amount a provider may
recover is the allowed amount set by the fixed fee schedule.

    A provider may appeal the initial determination of
coverage and the allowed amount by requesting a
redetermination by the fiscal intermediary. 42 C.F.R.
§ 405.904. Generally, a provider attaches additional patient
records to the request for redetermination to support the
claim.
6                 UNITED STATES V. POPOV

B. The Scheme

    During the three week trial, the government presented
evidence that Egiazarian owned all or part of the three health
care clinics. The clinics paid “cappers” to recruit patients and
drive them to the clinics. Patients arrived in groups
consisting primarily of non-English speaking, elderly or
disabled individuals and they stayed less than two hours.
During those two hours, each new patient had an
electrocardiogram and all patients underwent ultrasounds and
had blood drawn.

    At the Sacramento clinic, co-defendant Sol Teitelbaum,
a physician who was not a certified Medicare provider,
examined some of the patients, but he did not see all of them.
Regardless of which patients Teitelbaum actually examined,
Sofia Tosunyan, the office manager for the Sacramento clinic,
updated all of the patient charts and Teitelbaum signed them.
In the event that clinic employees were unable to perform the
requisite tests on the patients, they drew blood and performed
the tests on each other and placed the results in patient files.
After clinic employees updated the charts with diagnoses, test
results, and notes, they sent the charts to Southern California
to be signed by Medicare providers.

    Appellants’ involvement was limited to the operations of
the Sacramento clinic. They applied for and received
Medicare provider identification numbers for the clinic and
opened bank accounts in their own names to receive
Medicare payments. Even though neither Popov nor Prakash
ever examined or met a patient, they visited Egiazarian’s
office in Los Angeles, California, on a near weekly basis to
sign patient charts, Medicare claim forms, and blank
Medicare Redetermination Request forms. They received
                 UNITED STATES V. POPOV                    7

approximately twenty percent of the total amount reimbursed
by Medicare under their provider numbers.

    The Sacramento clinic sought reimbursement from
Medicare for the total amount of $2,236,332.88. The amount
allowed by Medicare was $747,961.31 and the amount paid
was $586,430.72. The clinic submitted claims under Popov’s
provider number in the amount of $1,079,862.22. The
allowed amount for these claims was $361,994.25, of which
Medicare paid $283,660.26, slightly less than eighty percent
of the allowed amount. The total amount billed to Medicare
under Prakash’s provider number was $1,156,470.66. The
allowed amount was $385,967.06 and the amount paid was
$302,770.46, also slightly less than eighty percent of the
allowed amount. On July 8, 2011, the jury found Popov and
Prakash guilty of all counts against them.

    On January 12, 2012, the district court sentenced Popov
to 97 months of imprisonment, the low end of the applicable
advisory guideline range, followed by three years of
supervised release. The court also ordered Popov to pay
$607,456.80 in restitution. The court adopted the offense
level calculations, criminal history category, and guideline
range set forth in the presentence report. In doing so, the
court rejected Popov’s objections to the presentence report’s
intended loss calculation and applied a sixteen-level
enhancement based on its finding that the intended loss was
$2,236,332.88, the total amount billed to Medicare by Popov
and Prakash for the Sacramento clinic.

    The district court also applied a sixteen-level
enhancement to Prakash based on an intended loss amount of
$2,236,332.88. Despite Prakash’s argument that the intended
loss should be eighty percent of the allowed amount for
8                  UNITED STATES V. POPOV

claims under his number only, the district court adopted the
facts, offense level calculations, and applicable advisory
guideline range set forth in the amended presentence report.
Based on those findings and a criminal history category of I,
the district court imposed the statutory maximum prison
sentence of 120 months followed by three years of supervised
release.2 The court also ordered Prakash to pay $607,456.80
in restitution.

                 STANDARD OF REVIEW

    We review a district court’s construction and
interpretation of the United States Sentencing Guidelines
Manual (“Guidelines”) de novo and its application of the
Guidelines to the facts for abuse of discretion. United States
v. Gomez-Leon, 545 F.3d 777, 782 (9th Cir. 2008).

     A district court’s factual determinations, including the
amount of loss in cases of fraud, are reviewed for clear error.
United States v. Tulaner, 512 F.3d 576, 578 (9th Cir. 2008).
“Clear error review is significantly deferential and requires us
to accept the district court’s findings absent a definite and
firm conviction that a mistake has been committed.” Leavitt
v. Arave, 646 F.3d 605, 608 (9th Cir. 2011) (internal
quotation marks and citation omitted). “[A]ll that is required
is that the government prove the loss by a preponderance of
the evidence.” United States v. Torlai, 728 F.3d 932, 946
n.13 (9th Cir. 2013).

    2
     The applicable advisory guideline range was 97–121 months.
However, the statutory maximum prison term for health care fraud that
does not result in serious bodily injury is 120 months. 18 U.S.C.
§ 1347(a)(2).
                     UNITED STATES V. POPOV                             9

                           DISCUSSION

A. Intended Loss

    The amount of loss resulting from health care fraud is a
specific offense characteristic that increases the defendant’s
offense level pursuant to the Guidelines. See U.S. Sentencing
Guidelines Manual (“U.S.S.G.”) § 2B1.1.3 Although the
Guidelines are not mandatory, a district court must begin
sentencing proceedings by calculating the applicable
Guidelines range. Gall v. United States, 552 U.S. 38, 49
(2007). “[C]ommentary in the Guidelines Manual that
interprets or explains a guideline is authoritative unless it
violates the Constitution or a federal statute, or is inconsistent
with, or a plainly erroneous reading of, that guideline.”
Stinson v. United States, 508 U.S. 36, 38 (1993).

    Section 2B1.1 of the Guidelines provides that the
applicable loss is the greater of the actual loss or the intended
loss. U.S.S.G. § 2B1.1 cmt. n. 3(A). “Actual loss” means
“the reasonably foreseeable pecuniary harm that resulted
from the offense,” while “intended loss” means “the
pecuniary harm that was intended to result from the offense.”
Id. § 2B1.1 cmt. n. 3(A)(I)–(ii). Notably, intended loss
includes “intended pecuniary harm that would have been
impossible or unlikely to occur (e.g., as in a government sting
operation, or an insurance fraud in which the claim exceeded
the insured value.).” Id. § 2B1.1 cmt. n. 3(A)(ii).

 3
   The 2007 Guidelines were used to determine the applicable advisory
range for each defendant. All references to the Guidelines are to the 2007
edition unless otherwise stated.
10               UNITED STATES V. POPOV

    Appellants Popov and Prakash argue that the district court
erred in finding that the intended loss was the amount billed
to Medicare, rather than the amount Medicare actually paid.
They contend that the total amount billed overstates the
intended loss because they could not have expected to receive
that amount, given that Medicare caps the amount of payment
for each service performed. Because it is well known that
Medicare routinely pays much less than the billed amount,
they argue that the district court should have calculated the
intended loss based on the amounts actually paid by
Medicare.

    Although this court has yet to publish an opinion
addressing the appropriate measure of loss for sentencing
purposes in health care fraud cases, several of our sister
circuits have considered the question. For example, in United
States v. Miller, the Fourth Circuit determined that a district
court may rely on the amount billed to Medicare and
Medicaid in a health care fraud case as prima facie evidence
of the loss the defendant intended to cause. 316 F.3d 495,
504 (4th Cir. 2003). “As anyone who has received a bill well
knows, the presumptive purposes of a bill is to notify the
recipient of the amount to be paid.” Id. However, the
amount billed is not conclusive evidence of intended loss. Id.
at 503–04. Parties may introduce additional evidence to
support their positions that the amount billed either
exaggerates or understates the defendant’s intent. Id. at 504.

    Several other circuit courts have adopted this burden-
shifting framework to determine the defendant’s intended loss
for sentencing in the health care fraud context. E.g., United
States v. Isiwele, 635 F.3d 196, 203 (5th Cir. 2011); United
States v. Singh, 390 F.3d 168, 194 (2d Cir. 2004). In Isiwele,
the district court applied a fourteen-level increase to the
                 UNITED STATES V. POPOV                     11

defendant’s base offense level after finding that the intended
loss was the total amount billed to Medicare and Medicaid.
Id. at 199. On appeal, the Fifth Circuit expressly adopted the
approach taken in Miller, and remanded the case for
resentencing on the loss issue based on the lack of clarity
regarding the standard for determining loss and the evidence
in the record suggesting that the defendant intended to receive
only the capped amount. Id. at 203.

     Similarly, in Singh, the Second Circuit followed this
approach in a health care fraud case in which the defendant
took the witness stand at trial. 390 F.3d at 194. During the
trial in that case, the defendant testified about his medical
practice, but he did not testify about the amount of money he
expected to receive from Medicare. Id. Because the evidence
in the record supported a finding that the defendant was
intimately familiar with Medicare’s fixed rate billing
practices, the court vacated the sentence with regard to the
calculation of loss amount to allow the defendant an
opportunity to show that the amount he intended to receive
from the insurers was less than the total amount he billed. Id.
at 193–94.

    Consistent with this approach, the 2011 amendments to
the Guidelines altered Application Note 3 to § 2B1.1 to
address this situation. Application Note 3(F)(viii) now
instructs districts courts that in health care fraud cases
involving a Government health care program, “the aggregate
dollar amount of fraudulent bills submitted to the
Government health care program shall constitute prima facie
evidence of the amount of the intended loss.” U.S.S.G.
§ 2B1.1, cmt. n. 3(F)(viii) (2013).
12               UNITED STATES V. POPOV

    In light of the express instructions in the current
Guidelines and the way in which the burden shifting
framework has been applied by our sister circuits, we now
join those courts. In health care fraud cases, the amount
billed to an insurer shall constitute prima facie evidence of
intended loss for sentencing purposes. If not rebutted, this
evidence shall constitute sufficient evidence to establish the
intended loss by a preponderance of evidence. However, the
parties may introduce additional evidence to support
arguments that the amount billed overestimates or understates
the defendant’s intent.

    Because the record below leaves us uncertain as to what
the district court understood the law to be with respect to
calculating intended loss for sentencing purposes and there is
evidence suggesting that Popov and Prakash may have been
aware that Medicare only pays a fixed amount, we vacate
Popov’s and Prakash’s sentences and remand for resentencing
on this issue consistent with the standard set forth above. The
court may utilize all evidence presented at trial and
sentencing. The parties may present additional evidence for
resentencing on the issue of intended loss.

B. Foreseeable Loss

    In addition to challenging the court’s intended loss
calculation, Prakash argues that he should not be held
accountable for claims submitted to Medicare under Popov’s
provider number. He contends that he did not know Popov
and was not aware that Popov was billing Medicare for the
Sacramento clinic. Thus, he argues that Popov’s claims for
reimbursement were not foreseeable to him. This argument
is not persuasive.
                  UNITED STATES V. POPOV                     13

    When calculating loss attributable to a defendant on the
basis of a conspiracy, the Guidelines provide that the relevant
conduct includes “all reasonably foreseeable acts and
omissions of others in furtherance of the jointly undertaken
criminal activity.” U.S.S.G. § 1B1.3(a)(1)(B). “The
principles and limits of sentencing accountability under this
guideline are not always the same as the principles and limits
of criminal liability.” Id. § 1B1.3 cmt. n. 1. The focus is on
acts for which a defendant should be held accountable rather
than criminally liable. Id.

    Testimony during trial revealed that Prakash saw Popov’s
name next to his own name on the clinic sign. Although
Prakash argues that employees told him that Popov no longer
worked for the clinic, evidence suggests that Prakash knew
that Popov had at one time held a role in the conspiracy
similar to his own.

    Furthermore, during trial and at sentencing, the
government presented patient charts containing both Popov’s
printed name and Prakash’s signature. When viewed in
conjunction with the evidence that Popov and Prakash were
the only two named physicians on the clinic’s sign, these
documents were sufficient to support the district court’s
finding that Popov’s bills to Medicare were foreseeable to
Prakash. Even though we might have decided the issue
differently, we cannot conclude with a “definite and firm
conviction that a mistake has been committed.” Easley v.
Cromartie, 532 U.S. 234, 242 (2001) (quoting United States
v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
Prakash therefore, fails to demonstrate that the court’s finding
was clearly erroneous.

   VACATED AND REMANDED for resentencing.