Court Opinion

ID: 4345322
Source: CourtListenerOpinion
Date Created: 2018-11-28 21:00:23.845434+00
Date Added: 2024-06-11T08:47:41.132028
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                              File Name: 18a0595n.06

                                        Nos. 17-3604/3612

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT
                                                                                    FILED
                                                                              Nov 28, 2018
 UNITED STATES OF AMERICA,                                )
                                                                          DEBORAH S. HUNT, Clerk
                                                          )
        Plaintiff-Appellee,
                                                          )      ON APPEAL FROM THE
                                                          )
 v.                                                              UNITED STATES DISTRICT
                                                          )      COURT FOR THE
                                                          )
 ISAAC R. KNIGHT and DELORES L. KNIGHT,                          NORTHERN DISTRICT OF
                                                          )      OHIO
        Defendants-Appellants.                            )

       Before: COLE, Chief Judge; GRIFFIN and KETHLEDGE, Circuit Judges.

       KETHLEDGE, Circuit Judge. Delores and Isaac Knight, mother and son, were convicted

of healthcare fraud and conspiracy to commit the same. They each challenge the sufficiency of

the evidence supporting their convictions. Delores also challenges the district court’s denial of her

motion to sever her trial from Isaac’s, and Isaac challenges his sentence. We affirm both

defendants’ convictions, but vacate Isaac’s sentence because the district court made a mistake of

fact when it applied a Guidelines enhancement for obstruction of justice.

                                                 I.

       For about ten years, Delores Knight headed Just Like Familee (Familee), a business that

provided home-healthcare services in Ohio. Delores’s daughter, Theresa Adams, co-owned the

business and directed sales and marketing. Delores’s son, Isaac Knight, managed a branch office

in Mentor, Ohio.
Nos. 17-3604/3612, United States v. Knight

       From 2007 to 2014, Familee engaged in healthcare fraud. Among other things, the

company falsely certified compliance with Medicare, Medicaid, and Veterans Affairs rules, billed

multiple agencies for the same service, and billed for services not provided (including for patients

who were already deceased). Eventually, the government’s auditors caught on. Various reviews

showed that 70 to 100 percent of Familee’s claims were improper—if not fraudulent. Medicare,

Medicaid, and Veterans Affairs then barred the company from billing for any more services. In

response, Delores, Theresa, and Isaac started a new company, Elegance Home Health, and Isaac

applied for accreditation to begin billing Medicare again.

       Soon thereafter, a grand jury indicted Delores and Isaac (among others) for healthcare

fraud, conspiracy to commit healthcare fraud, and money laundering, in violation of 18 U.S.C. §§

1347, 1349, 1957. The grand jury also indicted Isaac for making a false statement on Elegance’s

application for Medicare accreditation, in violation of 18 U.S.C. § 1035, on the theory that Isaac

falsely marked the “No” checkbox in response to the question whether Medicare had ever taken

an adverse action against the applicant. Before trial, Delores moved to sever her trial from Isaac’s.

The district court denied the motion.

       The district court thereafter conducted an eleven-day joint trial. The jury convicted Delores

on all counts, and convicted Isaac on all counts except the one that he had made a false statement

on Elegance’s application. The district court sentenced Delores to 120 months’ imprisonment and

Isaac to 87 months, and also ordered both defendants, jointly and severally, to pay restitution in

the amount of $8,168,107.24. These appeals followed.

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Nos. 17-3604/3612, United States v. Knight

                                                II.

                                                A.

       Delores and Isaac challenge the sufficiency of the evidence supporting their convictions

for healthcare fraud and conspiracy to commit the same. When reviewing a guilty verdict, “the

relevant question is whether, after viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the essential elements of the crime beyond

a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original).

       No one disputes that the government proved fraud. Indeed, Delores admits that “[t]here is

no question” that Familee “engaged in numerous criminal activities.” She and Isaac argue only

that the prosecution lacked sufficient evidence that they personally were involved in the frauds.

       The government had ample evidence of Delores’s involvement. Familee’s nursing director

testified that Delores had asked her to make false statements on medical forms. The company’s

billing clerk testified that Delores had told her to lie on forms, and that Delores—who supervised

the medical records department—had known that the billed services were improperly documented.

A vendor who sold billing software to Familee testified that Delores had asked how to disable the

software’s double-billing safeguards. Several Familee employees testified that nothing “happened

at Just Like Familee” that Delores “didn’t oversee or have a role in.” This evidence allowed the

jury reasonably to conclude that Delores had committed fraud and conspired to do so. That

conclusion likewise disposes of Delores’s challenge to the evidence supporting her money-

laundering conviction, because (as she admits) that argument is derivative of her challenge to her

fraud convictions.

       The government’s case against Isaac was similar. The company’s nursing director testified

that Isaac had told her to certify phony visits to patients, and that Isaac had been copied on other

                                                -3-
Nos. 17-3604/3612, United States v. Knight

emails requesting fraudulent signatures and forged notes. A receptionist also testified that Isaac

had told her to ask various nurses fraudulently to sign forms, and that when those nurses had

refused, Isaac had told her to fax the unsigned forms to the nursing director for signature.

Documents also showed that Isaac had been involved in founding Elegance Home Health shortly

after Familee was barred from billing the agencies—which strengthened the inference that he was

in on the scheme. This evidence was enough for the jury to find that Isaac committed healthcare

fraud and conspired to do the same.

       Isaac argues that the jury’s finding that he committed healthcare fraud conflicts with its

acquittal of him on the charge that he made false statements in Elegance’s application. But an

inconsistent verdict does not by itself warrant a retrial. See United States v. Lawrence, 555 F.3d

254, 262 (6th Cir. 2009). And in any event the jury’s findings were not inconsistent: if Isaac did

not lie on Elegance’s application, he still could have been a participant in Familee’s fraud. As

indeed the evidence showed he was. His argument is meritless.

                                                B.

       Delores argues that the district court should have granted her motion to sever her trial from

Isaac’s because, she says, evidence of Isaac’s fraud unduly prejudiced her case. We review the

district court’s denial for an abuse of discretion. United States v. Cody, 498 F.3d 582, 586 (6th

Cir. 2007). As relevant here, Delores must make a “strong showing of prejudice” and show that

joinder prevented the jury from “making a reliable judgment about guilt or innocence.” United

States v. Hang Le-Thy Tran, 433 F.3d 472, 478 (6th Cir. 2006).

       The joinder had no such effect here. Co-conspirators are routinely tried jointly, and

Delores does not explain why this joinder was prejudicial to her. Moreover, the district court

properly instructed the jury to consider separately the evidence regarding each count and each

                                                -4-
Nos. 17-3604/3612, United States v. Knight

defendant. And the jury acquitted Isaac on one count, which suggests that the jury was “able to

compartmentalize and distinguish the evidence concerning the different offenses charged.” See

Cody, 498 F.3d at 588 (internal quotation marks omitted). Delores’s challenge is meritless.

                                                 C.

       Isaac argues that the district court erred in imposing a two-level obstruction-of-justice

enhancement to his sentence. See U.S.S.G. § 3C1.1. We review the district court’s factual findings

for clear error and its application of the enhancement de novo. See United States v. Baggett, 342

F.3d 536, 540-41 (6th Cir. 2003).

       Section 3C1.1 provides for a two-level enhancement when the government proves by a

preponderance of the evidence that a defendant “willfully obstructed or impeded, or attempted to

obstruct or impede, the administration of justice.” U.S.S.G. § 3C1.1; see United States v. Dunham,

295 F.3d 605, 609 (6th Cir. 2002). The notes to § 3C1.1 list “committing, suborning, or attempting

to suborn perjury” as examples of obstructing justice. U.S.S.G. § 3C1.1 cmt. n. 4(b). If the district

court applies the enhancement on the ground that the defendant solicited perjury, the court must

make a specific factual finding to that effect. See United States v. Lawrence, 308 F.3d 623, 632

(6th Cir. 2002).

       Here, the district court found that Isaac had solicited false testimony from his girlfriend, to

the effect that he had been in Kentucky when a fraudulent fax was sent from his Ohio office. But

the government and Isaac now agree that Delores, not the girlfriend, gave that testimony. The

court’s stated basis for the enhancement was therefore clearly erroneous.

       The government argues nonetheless that application of the enhancement was proper

because Delores gave the false testimony in response to questions from Isaac’s counsel. Whether

those facts provide an alternative basis for the enhancement, however, is for the district court to

                                                 -5-
Nos. 17-3604/3612, United States v. Knight

decide in the first instance. See United States v. Parrott, 148 F.3d 629, 635-36 (6th Cir. 1998).

We therefore vacate Isaac’s sentence.

                                                 D.

         Finally, Isaac argues that the court attributed the wrong amount of financial loss to him

when it calculated his Guidelines range. We review the district court’s loss calculation for clear

error, but review its methodology de novo. See United States v. Meda, 812 F.3d 502, 519 (6th Cir.

2015).

         The Guidelines increase a defendant’s offense level in proportion to the loss caused by the

defendant’s fraud. See U.S.S.G. § 2B1.1(b). To calculate the loss, the court “need only make a

reasonable estimate” of the loss, but must deduct the fair market value of any services rendered to

the victim before the fraud was detected. § 2B1.1 cmt. n. 3(C), (E).

         Here, the district court calculated the government’s loss by relying on auditors’ estimates

of the percentage of Familee’s claims that had been fraudulent. Isaac does not challenge this

method; instead, he argues that the court should have reduced the loss by the value of any services

that Familee actually rendered to patients. But Isaac presented no evidence regarding the value of

services that Familee actually provided. For that reason, among others, his argument fails. See

United States v. Washington, 715 F.3d 975, 984-85 (6th Cir. 2013). For the same reason, we also

reject Isaac’s challenge to the amount of restitution ordered by the district court.

                                            *     *     *

         Delores’s conviction and sentence are affirmed. Isaac’s conviction is affirmed, but his

sentence is vacated and his case is remanded for resentencing.

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